Government Spending is Fuelling the Fire

There is a massive disconnect between the RBA’s projections and the reality facing Australian families. Reckless government spending is fuelling inflation, and everyday people are paying the price. In this session with the RBA in December, I questioned Governor Bullock on her claim that inflation expectations are 'anchored' at 2.5%. With CPI at the time sitting at 3.8% (now 4.2%), that 'anchor' looks like it’s dragging. I asked her who has lost credibility here — the RBA or the government? There’s a real risk of cutting rates too early because of political influence and outside pressure. While Ms. Bullock insists the Board isn't being swayed by politics, I’m still sceptical about what really happens behind the scenes. One of the biggest risks I raised was the threat of a federal credit rating downgrade. If the government can't show budget discipline and we lose our AAA rating, bank borrowing costs will shoot up. And if that happens, mortgage rates will go up, even if the RBA doesn't touch the cash rate and that’s a rate hike due to government incompetence. Finally, we touched on the data. I pointed out how absurd it is that the ABS classifies someone as 'employed' if they work just one hour a week. While the Governor appears to trust the official statistics, these numbers are masking the true level of underemployment. There are far more Australians struggling to find work than the headline figures suggest. Transcript: https://www.malcolmrobertsqld.com.au/government-spending-is-fuelling-the-fire/