Category Archives: Interest rates

Politics live: ‘difficult day for Australians with a mortgage’, Chalmers says; east coast gas shortages in spotlight

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The resources minister, Madeleine King, has taken the first step in reining in the big three LNG exporters by ‘triggering the trigger’

Labor unlikely to extend the fuel excise cut

Asked about the fuel excise in that same interview, Jim Chalmers said:

I’ve been really upfront with people, Charles, for some time now – before the election, during the election and after the election – and pointed out that extending that would cost some billions of dollars and the budget can’t afford that. We’ve inherited a budget which is absolutely heaving with a trillion dollars in Liberal party debt. And when interest rates are rising, it actually costs more and more to service that debt.

The fastest-growing area of government spending in the budget is actually servicing the debt that we’ve inherited because, as interest rates rise, it becomes more expensive to pay that back. So every dollar borrowed, whether it’s by our predecessors or by the new government costs more to pay back and we need to be conscious about that. We need to be responsible about that and upfront about that. And that’s what we’re being.

This isn’t about any one individual. This is about a difficult day for Australians with a mortgage, another difficult day I think everybody is bracing for the interest rate rise that the governor and the Reserve Bank board has flagged.

These decisions are taken independently by the Reserve Bank, by its board and by its governor. People are expecting this outcome today. But it won’t make it any easier.

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Australia’s official interest rates expected to rise by half-percentage point, economists say

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Experts predict RBA will lift cash rate from to 1.85%, marking a 175-basis point increase since May

Australia’s official interest rates are all but certain to be lifted on Tuesday with the expected half-percentage point increase marking the Reserve Bank’s sharpest tightening phase since 1994.

A survey by Bloomberg News found 28 of 30 respondents predict the RBA board will lift the cash rate from 1.35% to 1.85% at its monthly meeting. That move would mark a 175-basis point increase in the rate since it began hiking in May.

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Australian property prices tumble at rates not seen since GFC

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Interest rate rises lead to dwelling values falling for third month in a row with Sydney prices down 5.2% since January

Australia’s property prices are falling at rates comparable to the onset of the global financial crisis or the 1980s downturn as higher interest rates deflate demand. Sydney’s drop, though, is already more precipitous than those earlier eras.

In July alone, dwelling values fell 1.3% on average nationally, marking a third consecutive monthly decline according to CoreLogic, a property data firm. Five of the nation’s eight capitals reported falls, with Sydney down 2.2% and Melbourne retreating 1.5% while prices in Brisbane, Canberra and Hobart were also starting to slide.

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Mortgage holders should brace for short-term pain as RBA signals steady interest rate rises to tackle inflation

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Philip Lowe says reserve bank looking for its ‘neutral rate’ which could see cash rate almost double in coming months

Mortgage holders should brace themselves for interest rate rises of at least another 1.15 percentage points before the end of the year as the Reserve Bank of Australia attempts to hose down inflation before it takes hold of the economy.

The RBA governor, Philip Lowe, said he believed inflation was on track to hit 7% by the end of 2022, with an unemployment rate of 3.5% but said the bank was confident inflation would return to the “target range” of between 2% and 3% in a “short while”.

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UK inflation hits fresh 40-year high of 9.4% as fuel prices rise

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Annual rate in June up from May’s 9.1% figure and exceeds analysts’ expectations

Rising petrol and diesel prices for motorists and dearer food pushed Britain’s annual inflation rate to a fresh 40-year high of 9.4% last month.

Figures from the Office for National Statistics showed the government’s preferred measure of the cost of living – the consumer prices index – was up from May’s 9.1% figure.

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Mortgage holders could face large jump in repayments if interest rates increase by 3%, RBA says

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Deputy reserve bank governor, Michele Bullock, says most Australians are ‘well placed’ to absorb impact of rate rises

Up to 30% of mortgage holders could struggle to keep up with their home repayments if interest rates were to increase by 3%, according to the Reserve Bank of Australia, which says first-home owners, late entrants to the market and low-income loan holders are most at risk.

With the bulk of low fixed-rate loans due to expire in the next two years, about half of those coming into the new variable market will face increases in their repayments of at least 40%. For those whose fixed loans expire in the middle of next year, the reserve bank estimates a median increase of about $650 a month in repayments, or a 45% increase.

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Nobel prize-winning economist Joseph Stiglitz calls for windfall profits tax in Australia

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Tax is a ‘no-brainer’ after companies’ huge profits during Covid but corporate influence makes it ‘politically difficult’, Stiglitz says

The Nobel prize-winning economist Joseph Stiglitz has called for a windfall profits tax, arguing the idea is a “no-brainer” that has been taken off the table due to the influence of big companies.

Stiglitz made the comments to reporters during a tour of Australia after personally lobbying the treasurer, Jim Chalmers, to introduce the tax and warning that excessive interest rate rises could push Europe, the US, and then Australia into recession.

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Jim Chalmers warns of ‘confronting’ inflation and wages forecast in July economic update

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Treasurer says rising interest rates will affect economic growth but Labor has plans to provide cost-of-living support

Australia’s July economic update will contain “confronting” news about lower growth projections and higher inflation cutting real wages, Jim Chalmers has said.

The treasurer said the update to be delivered on Thursday 28 July comes as the global economy is in a “difficult if not dangerous place” due to high debt and rising interest rises to combat inflation.

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Boris Johnson has left the UK economy in a parlous state

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Analysis: If Johnsonomics stands for anything, it is a lack of plan or vision to address Britain’s economic woes

Boris Johnson entered Downing Street in July 2019 with a promise. The doubters, doomsters and gloomsters were going to get it wrong again: his leadership would make Brexit a success, re-igniting an economy stalled by the divisions over Europe.

Three years later, almost to the day, he prepares to leave with the country reeling from a political implosion of his own making, and an economy teetering on the brink of recession.

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Interest rate hikes may send about 200,000 more households into mortgage stress, says analyst

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Households struggling with loan repayments are ‘looking at a deep hole - incomes are not rising but costs are’

Many homeowners may be forced to tighten their belts after the Reserve Bank of Australia lifted the cash rate by half a percentage point, sending an estimated 200,000 households into mortgage stress.

On Tuesday, the RBA raised the official cash rate 50 basis points to 1.35% – the highest since May 2019.

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Sydney house prices still 20% above pre-pandemic levels despite rising interest rates

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Economists say while property prices could come down by up to 20%, affordability has ‘never been worse’

House prices in Sydney remain more than 20% above pre-Covid levels despite rising interest rates, as economists warn housing affordability has “never been worse”.

After hitting record highs in January, Sydney house prices have dropped -1.5%, but remain 22.7% above pre-2020 levels, according to CoreLogic data.

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ASX: Australian stocks close almost 3.6% down after global sell-off on inflation fears

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Benchmark ASX200 index closes 246 points lower, after falling 360 points in the first 15 minutes of trading on Tuesday

Australian shares have joined a global retreat, ending almost 3.6% lower, as investors fear central banks will lift interest rates more aggressively, slashing economic growth and companies’ profits.

The benchmark ASX200 share index of the top 200 companies lost just over 5.2% within the first quarter an hour of trading, or more than 360 points. The losses, though, were pared by the end, with the market ending 246 points lower at 6,686. The Australian dollar also remained below 70 US cents.

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Australia live news update: Wong condemns ‘reckless’ North Korea missile launches; Nine overturns order to hand over drafts

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NSW Appeals Court throws out order requiring Nine Entertainment to hand over draft material; foreign affairs minister labels North Korean ballistic launches ‘reckless and destabilising behaviour’; stripping dual nationals of citizenship unlawful, high court rules; National Disability Insurance Agency chief resigns; Victoria records 25 Covid deaths, Queensland 15, NSW records 10 deaths, WA records eight, ACT records one. Follow all the day’s news

China’s warning to Australia

China has warned Australia to stop “provocations” or face “serious consequences” after the federal government said a Chinese jet plane was intercepted, the AFP and Guardian staff report.

The Australian military plane seriously threatened China’s sovereignty and security and the measures taken by the Chinese military were professional, safe, reasonable and legal.

We can trace Australia’s celebrated connection to the space industry back to the 1950s and as a nation we have to build on that legacy.

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Treasurer warns of ‘severity and magnitude of inflation challenge’ after RBA hikes official interest rate

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Jim Chalmers responds to Reserve Bank decision to lift cash rate 50 basis points as Anthony Albanese declines to comment during Indonesia trip

The treasurer, Jim Chalmers, has described the Reserve Bank’s decision to hike the cash rate by 50 basis points as “difficult” news for homeowners, while warning that inflation will get worse before it gets better.

The prime minister, Anthony Albanese, who is in Indonesia, left the government’s response to the RBA’s higher-than-expected increase on Tuesday to his treasurer as he sought to revive a Keating-era tradition of not commenting on domestic issues while travelling overseas.

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PM says prospect of Chinese naval base in Cambodia ‘concerning’ – as it happened

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Prime minister responds to reports of Chinese naval base in Cambodia; nation records 29 Covid deaths. This blog is now closed

There’s no magic fix for inflation, Jason Clare says

Education minister Jason Clare appeared on the Today show this morning alongside Scott Emerson.

Inflation is through the roof. Wages are through the floor. We have got interest rates knocking at the door. The Reserve Bank ... have made it clear there will be a number of interest rate rises, which makes it harder for people with big rate rises already. Especially for people who are ahead in their mortgage, but if you have just signed up and the bank says you have to pay more, it will make it harder and harder.

There is no simple magic fix to this.

The market expects them to increase interest rates because we have an inflation problem in the economy and rising interest rates were something that the Reserve Bank governor flagged before the election and that is the trajectory we are on, but just because these interest rate rises are expected, it won’t make them any less difficult for a lot of people who are already confronting cost-of- living pressures.

That is the unfortunate reality. There is no point mincing words about that. Our job is the government is to make sure that after some of this near-term cost-of-living relief runs out that it is replaced by responsible long-term sustainable cost-of-living relief in areas like medicines and childcare, getting power bills down over time and getting real wages moving again.

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Ruston dismisses suggestion Liberal party has ‘lost its way’; Hunter candidates square off – as it happened

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Jim Chalmers accuses Josh Frydenberg of lying about tax as treasurer and shadow treasurer pressed on NDIS in debate; Coalition ‘oblivious’ to pressures facing working families, Albanese says; border force won’t confirm reports of asylum seekers moved to Christmas Island; at least 56 Covid deaths recorded. This blog is now closed

In a move designed to hold on to what is known as the “grey vote”, the government has announced a two-year freeze on deeming rates, in response to the interest rate rise.

That means pensioners with cash deposits which will increase with the rate rise (interest rates on bank accounts go up too) won’t have to worry about hitting the cap of how much they can earn before their pension is impacted.

We have always said where there are good ideas we will support them. We sought to be constructive during the pandemic and did support many of the measures and, you know, looking at this decision today, we have said, yes, this is a good idea and we will.

He already has, we went to a religious service at a local synagogue and no doubt he has many competing requests on his ...

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Shock interest rate rise shows Australia’s economic exceptionalism is fading

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RBA’s decision is, in the words of one economist, ‘a radical revision’. Could this turn a plateauing of property prices into a rout?

In a world of economic shocks, the questions left by Tuesday’s surprisingly large increase in the official interest rate include what will bring the next thunderbolt.

After all, not one of 32 economists surveyed ahead of the Reserve Bank’s monthly meeting predicted the board would emerge with a 25 basis point cash rate increase, finally liberating it from the record low 0.1% it had hovered at since November 2020.

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Reserve Bank interest rates: RBA lifts official cash rate to 0.35% in first rise since 2010

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Central bank raises rate by 0.25 percentage points in a move that will stoke cost-of-living debate ahead of federal election

The Reserve Bank of Australia has lifted its official cash rate for the first time in more than 11 years in its first intervention in a federal election since John Howard lost office in late 2007.

The central bank lifted its cash rate target from the record low 0.1% it had hovered at since November 2020, during the depths of the Covid pandemic. It was raised more than expected to 0.35%, and the RBA signalled more rises to come.

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ABC misses out on final leaders’ debate; key independents back call for robodebt inquiry – as it happened

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Channel Seven to host final debate of election campaign; crossbenchers back call for royal commission into robodebt scandal; Scott Morrison focuses on cost of living concerns; Anthony Albanese marches for May Day in Brisbane; Sally McManus would support wage increase for public sector workers; 13 Covid deaths recorded across the nation. This blog is now closed

Labor is still on the campaign sell for its first homeowner policy.

Jason Clare faced questions ranging from, “Is this too small to have an impact?” to, “Won’t it drive up house prices?”

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Labor to help low and middle income earners buy home with shared ownership scheme

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Anthony Albanese will unveil $329m Help to Buy housing initiative as the centrepiece of Labor’s campaign launch in Perth

Anthony Albanese will provide help for Australians on low and middle incomes to buy houses by giving eligible applicants a commonwealth equity contribution of up to 40% of the purchase price of a new home, and up to 30% for an existing home.

The Labor leader will unveil the new $329m housing initiative as the centrepiece of Labor’s official campaign launch in Perth on Sunday. If Albanese wins on 21 May, Labor’s new shared equity housing policy will be implemented in addition to the Morrison government’s First Home Guarantee scheme.

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