There were lots of memorable lines in Tony Abbott’s first press conference as Liberal leader yesterday but there was one you can expect to hear repeatedly ahead of the next election, whenever that might be.
``Each and every interest rate rise over the next 12 months is due to the irresponsible spending spree of the Rudd government,’’ he said.
There you have it. Kevin Rudd is going to be made to own each and every 25 basis point rise in interest rates between now and the next election - including the latest one yesterday.
The ETS is the issue that has dominated the debate for the past fortnight but interest rates - and the associated ``Labor is burying you in debt and deficit’’ line that will be flogged by the Coalition - will have just as much say in Rudd’s election timing.
Labor doesn’t want to be going to the polls with rates heading back toward 4.5-5 per cent. As Wayne Swan reluctantly accepts, the wonderful rates holiday we’ve enjoyed through the non-recession is over and households will soon be hurting. (Though, Westpac’s stunning and inexplicable 45 basis point rise in its mortgage rates yesterday suggests the real pain might come sooner than Labor expects.)
There was some talk, fuelled by the debt crisis in Dubai, that the Reserve Bank would give us all a Christmas gift and hold off raising rates until our credit card payments become due next year.
But yesterday’s statement from Glenn Stevens and his crew, who raised rates for the third time in three months for the first time ever, suggests they are worried about a housing bubble and we are on the fast track to situation normal, which is official rates somewhere around 5.5 per cent and mortgage rates near 7.5 per cent.
``In Australia, the downturn was relatively mild, and measures of confidence and business conditions suggest that the economy is in a gradual recovery,’’ the RBA said.
The global economy, so enfeebled just six months ago, has ``resumed growth’‘, we’re told. The strong dollar is helping keep inflation and rates pressure under control but the unemployment rate is close to its peak and, says the RBA, “the risk of serious economic contraction in Australia” has passed.
For what it’s worth - and I have lost a little faith in economists during the financial crisis - the consensus is for rates to continue to rise after, perhaps, a brief break at the start of next year to be about 4.25-4.75 per cent (and as high as 5.25 per cent) by the second half of 2010.
The reason rates are rising is that Australia has performed better than any other advanced economy during the downturn.
But, as Abbott knows, pride in your country’s economic achievements counts for nothing when your mortgage payments are rising every month.
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RT @lynlinking: @farrm51 Well the links should be posted on Twitter more, by people that care about the Government. Perhaps the MSM could help cheers lyn
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RT @avgaunz: @drpiotrowski @ThePunchHQ really interesting article! Although we offer email and phone support, we still receive the odd letter too...
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