CANBERRA (London Post with AAP) Dr. Majid Khan -Households have been warned to prepare for federal budget cuts to keep inflation in check and avoid a “booby trap” in the economy.
After the latest interest rate decision, Chancellor Katie Gallagher set the course for further austerity measures.
Senator Gallagher welcomed the opportunity to put the brakes on further rate hikes after 10 straight rate hikes.
Reserve Bank Governor Philip Lowe has hinted that a moratorium could be coming soon.
Interest rates have risen from 0.1%, a historic low in May 2022, to 3.6%. NAB, Westpac and ANZ have passed the latest 0.25 percentage point increase to their variable rate mortgage customers.
Big banks have also increased interest rates on various deposit products, improving savers’ returns.
Senator Gallagher said May’s federal budget calls for fiscal consolidation and is responsible for mitigating the effects of inflation.
“There are areas where we can reasonably save, and I’m not going to pretend it’s easy.
“We have a lot of booby traps left by the former government that we are working on.”
The finance minister said the central bank will make its own decisions based on economic data.Welcome he lowers his sign. “I don’t think it’s unusual for people to want to see a moratorium because of the impact these interest rates have,” she said.
The RBA’s softer tone contrasts with the Federal Reserve’s more aggressive stance.
Dr. Lowe argues that Australia is in better shape than other developed countries. This is due to relatively subdued wage pressures and a high proportion of interest rate sensitive variable rate and short term fixed rate mortgages.
But NAB market economist Tapas Strickland said there are signs of a recovery even among mortgage holders who can sustain household spending longer than expected.
The RBA’s analysis shows that total mortgage payments have remained flat over the past few quarters, with higher interest rates so far absorbing most of the excess payments. “Households have effectively reduced overpayments and increased minimum payments at the same time,” Strickland said.
He said most people expected a significant drop in household spending, and the prospect of simply cutting the excess that mortgage holders are paying could cast doubt on that outlook.
