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The Daily Mail reported that the latest inflation data released this week showed that Australian inflation rose to 4% from 3.6% previously. Rising inflation could lead to the RBA announcing a rate hike in August, and there is also a possibility that it will continue in September.
(Image source: Internet)
A growing number of economists believe that the series of rate cuts that the market had expected before the next general election could eventually be replaced by the RBA's rate hikes.
Federal Treasury Secretary Jim Charles previously said that the core of the budget is to achieve a balance between spending and revenue, so as to achieve the goal of reducing inflation and interest rates. However, instead of falling, the inflation rate has risen. Moreover, the RBA may be forced to raise interest rates again.
This has also led to the shelving of plans for an early general election later this year, as Anthony Albanese does not want to encounter a rate hike by the RBA during the election campaign.
(Image source: Daily Mail)
The Productivity Commission confirmed on Friday that there has been no increase in productivity in Australia over the past 12 months.
The Daily Mail reported that this also means that the wage growth previously advertised by the Labour government has not improved productivity. While Australians' wages have risen, businesses have faced increased costs, which have then shifted some of the pressure onto consumers.
When the tax cuts are officially implemented in July, the flames of inflation may be poured another barrel of oil. If the RBA raises interest rates again, the money saved by tax cuts will immediately be eaten up by increased mortgages.
(Image source: Daily Mail)
Statistics show that Australia has experienced a per-capita recession for five consecutive quarters.
Australia narrowly escaped a technical recession thanks to soaring immigration numbers, but this has further exacerbated the housing crisis.
The RBA Governor's statement at the press conference was clearly saying that if interest rates are raised again, it means that the RBA no longer believes that there is a possibility of a soft landing for the economy. In other words, if another rate hike is made later this year, it means that the RBA has reached the point where it needs to control inflation through a recession.