Albo warns of pain ahead

GLOBAL FISCAL RISKS

THE Prime Minister has warned Australia is not immune from the global economic risk of recession as the latest rate rise puts more pressure on households.

The Reserve Bank put rates up for a ninth consecutive time on Tuesday, and said more rises were to come to tame high inflation.

The decision to hike rates by 25 basis points brings the current interest rate to 3.35 per cent, meaning average repayments on a $750,000 home loan have now risen nearly $1400 a month from last year.

Anthony Albanese, however, said he was hopeful that inflation had peaked, with a caveat that Australia was “not immune” from the impact of the global economy.

“We know that the global economy arising from the Russian invasion of Ukraine has seen a global spike in inflation, and we know that in some advanced economies that reached double digits,” Mr Albanese said on Wednesday. “It hasn’t reached that here, but it is clearly having an impact.”

Treasurer Jim Chalmers also offered little hope the government could make major interventions to target the rising cost-of-living, reiterating the delicate balancing act in order to not push inflation higher.

“The inflation challenge in our economy, which is making some of these interest rate rises necessary, is the government’s major focus,” he said. “And that’s why we’re showing spending restraint, we’re providing cost-of-living relief, we’re dealing with these issues in the supply chain, including in the workforce, because … high inflation and high interest rates (are) the defining challenge in the economy right now.”

He noted there would be about $1.5bn in cost-of-living relief contained in the May budget.

Deputy Opposition Leader Sussan Ley meanwhile said the ongoing interest rate rises were prompting Australian families to make “tough” decisions.

“You know (like) ‘what do we not spend money on? Do we not take a holiday? Do we not undertake that expenditure for our family for our future?’ It’s all going on the mortgage,” she said.

She said the Treasurer’s response to the rate rise, and warnings of further pain, were “pathetic”.

“We’re seeing no economic plan,” Ms Ley said.

Ms Ley said she wasn’t going to criticise the central bank and instead put the blame wholly on a government that she says “fails to recognise the pain that its economic policies are causing ordinary Australians”.

Dr Chalmers refused to be drawn on whether he believed RBA Governor Philip Lowe should resign from his post. He said Australia’s central bank was “the world’s best” and stressed the importance of its independence when asked whether the government would heed the Greens’ call to overturn the rate rise.