The other point is how the real estate market reacts to rising rates.
The bank, moved by what happened before the pandemic, is concerned that given the addiction of Australians to housing (and house prices) is limited by a medical condition, anything that deflates the market will have an impact. deep in the economy in general.
This is a problem that the bank (and governments) have been contributing to for a long time. But now we are at the point where the second most indebted households in the world are being asked to find hundreds of dollars more a month to cover record-size mortgages.
It is a political headache for the new government, but also an opportunity.
During the election campaign, this newspaper reported on the obvious dangers posed by the March 29 budget with its spending plans such as offsetting large and medium-sized low-income taxes that will begin to flow from 1 p.m. July.
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That’s the budget Jim Chalmers inherited. And it is what he can now reshape, advocating cuts in areas where pre-elections were politically banned.
There are obvious infrastructure projects that can be archived and programs that can be cut back on ways to get some cash out of the economy.
Remember, the deficit for next year is $ 78 billion. Does anyone really believe that the economy needs that extra amount of support to get out?
But Chalmers can’t wait until October to deliver his promised cost-of-living relief package. It seems unsustainable that the large lamington will be enough to calm angry taxpayers.
Voters could be prepared to give the new government time to find its feet. But they won’t if they find out they can’t afford to go out to dinner or buy extra clothes because interest rates are affecting their lives.
Cut to the chase of federal politics with Jacqueline Maley’s news, opinion, and expert analysis. Subscribers can subscribe to our weekly Inside Politics newsletter here.