ANALYSIS: Bad news might be coming for the government today — and for your home loan
There are four economic wildcards between now and the election, and we know exactly when each will be played.
After a series of extremely large interest rate hikes in the early 1990s succeeded in taming inflation, it has been close to the Reserve Bank target of 2–3 per cent ever since — so much so that even those of us who remember the 8 per cent inflation of the 1980s and the 18 per cent in the 1970s have come to regard fairly steady prices as normal.When ABC Vote Compass asked voters to name the issue of most concern to them in the 2016 election, only 3 per cent picked "cost of living".
While that's some way short of the 6.7 per cent inflation in Canada, the 6.9 per cent in New Zealand, the 7 per cent in the United Kingdom, and the 8.5 per cent in the United States, each of these countries has begun increasing interest rates as a result, some quite aggressively. The increase, and the explanation that it was much higher prices that brought it about, would be crushing for a government campaigning on what it is doing to address the cost of living. It would help Labor, which has made the cost of living a key plank of its campaign.
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