Domestic demand is being targeted by the RBA in an attempt to rein in price increases caused by external issues.
“Global factors explain much of this high inflation, but strong domestic demand relative to the ability of the economy to meet that demand is also playing a role.”
RBA Media Release
It seems unfair to pick on consumers when consumer demand is normal.
Consumers aren’t going crazy buying non-essential goods.
Consumers are being hit in the wallet from many directions including their mortgage repayments (thanks to the RBA), from energy price increases (petrol and electricity) due to places like Germany putting their supply in the hands of a mad man (thanks Angela) and lingering supply chain issues with spoilt brat trading partners.
It’s easy to blame the RBA when they have only a few levers to play with.
The federal government needs to step up and fast.
It can ease employment labour shortages by providing work visas to our South Pacific neighbours and for skilled workers.
It can do more with incentivised training and more targeted reductions in HELP debt or course fees.
The government can also target the extraordinary profits energy suppliers with higher levies and policies to ensure local supply is prioritised before exports.
And those tax cuts for the richer end of society, are they really needed? This is one of those times when a case for breaking election promises can most easily be made.
These are extraordinary times and extraordinary commercial profits should be shared with the commonwealth who can then look after those that can’t afford heating for instance. There also doesn’t need to be a cash hand out if local prices are low.
Although with the GFC still in recent memory, even for a Gen Z, you have to question the wisdom of the RBA reducing interest rates to levels, that saw 1.99% mortgages, that created massive repayment risks and fuelled house prices. So much so that now some are facing the double nightmare of triple the mortgage repayments and quite possibly massive house devaluations like we saw in the early 1990’s.