The RBA should hike Scott Morrison out of office

By in Australian interest rates

| 43 comments

There is one reason why the RBA should hike rates today and it has nothing to do with economics and everything to do with politics. It is PM Morrison:

So tomorrow it’s not about me, it’s not about Mr Albanese, it’s not about the Treasurer or the Shadow Treasurer, it’s about Australians themselves and the decisions they are making and understanding the pressures on the economy — and who they think is going to be better able to manage those pressures into the future.

The trap is set and the RBA can spring it. If it hikes then Morrison will spend the next three weeks being forced to repeat the line that he doesn’t hold the hose when it comes to economic performance. This is fatal on two fronts.

First, he is himself trashing his only pitch to voters about economic management.

Second, he is reinforcing everything that the electorate hates about his failure to take responsibility, which is Labor’s front and square election message.

Why should the RBA do this?

Because the country needs to be rid of Scott Morrison and the Colation so that it can reset the policy process to address Pacific islands, decarbonisation, energy security and industrial repair.

These five challenges are an interlinked national interest must-do if we are to buttress the future of libersalism in Australia. None can be fixed without the other and all must be fixed if the Australian way of life is to be protected from the encroachments of north Asian fascism.

Labor has better processes and policies and all fronts, and a big injection of independents should help drive it to deeper change over time

So, in a very real sense, by hiking interest rates today, the RBA will be protecting the economic system over which it presides.

Houses and Holes
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Comments

  1. sps179MEMBER

    I agree with the headline, but I am not strongly convinced that it would make much difference as regards decarbonisation or energy security. The Labor un-plan for net zero emissions is a 40% population increase. They will continue to serve the interests of fossil-fuel donors, while retailing economists’ porkies about carbon markets, carbon offsets and carbon capture.

    • TRADINGtheAPOCALYPSE

      Labor literally put a price on carbon. The LNP abolished that legislation. We still need a price on carbon.

      Labor tried housing tax reform (negative gearing). LNP attacked it. Electorate daft enough to vote against it (in fact they voted against the only party to have any policy at all).

      Is it really any wonder Labor don’t bother putting up anything serious anymore?

      • The Grey RiderMEMBER

        “Labor tried housing tax reform (negative gearing). LNP attacked it. Electorate daft enough to vote against it (in fact they voted against the only party to have any policy at all).”…indeed, and now the electorate is about to reap the whirlwind.

      • LachlanMEMBER

        I for one do not blame Labor for their small target strategy. The Australian public is far too stupid and fearful to be trusted to rationally consider and evaluate actual policies rather than latch on to small minded, sound bite scare tactics. Something Morrison and the Liberals generally excel at.

  2. GeordieMEMBER

    You’d think the ALP would have created their own version of fact-check for this election that validates claims in advertising and debate, which would have a twofold benefit to them:

    1) By taking ownership of the truth and putting it out there for others to verify, they display transparency and earn trust.
    2) It pulls all of the Coalition’s BS out and washes it down, revealing the dirty bastards for what they really are.

    You’d then have fact-checkers fact-checking their calls, and if they were then to be called out for not getting it quite right, they can then demonstrate integrity by acting on it and changing their message or policy.

    What a fresh change that would be!

      • GeordieMEMBER

        Agreed, but it’s a marketing play/ploy that could smash it away done right. Almost impossible to counter.

    • JohnRMEMBER

      How many facts would a fact-checker check if a fact-checker would check facts?

    • drsmithyMEMBER

      They are reliant on a largely hostile media to present this information, who will (as they always do) present it in a “both sides” narrative.

      Ie: it will be framed as “both sides do naughty things, look here is an equal number of examples from both”.

      That the examples from one side are worse by probably an order of magnitude or two in quantity and severity will never even be spoken of out loud.

  3. Ronin8317MEMBER

    The RBA can play it safe : 25 basis point today, then 25 more in June. 50 basis point today requires courage, whereas not hiking means the RBA have become part of the LNP, and will only hike rates under Labor.

    • GarethMEMBER

      You need a board full of patriots in the RBA who will do the right thing for the country, regardless of its cost to them or their bosses.

      • GeordieMEMBER

        Are there modern, high-profile public servants with the cogs to act in the best interests of the people?!?

    • Jl2012

      If the RBA dont hike today and then come through with 50 bps in june it would come across as incredibly partisan.
      You’d think there would be some very angry people in the federal ALP.
      I wonder what punsihment they would try to inflict on the RBA board in revenge?

    • JasonMEMBER

      It will be 15bp or 40 to get it back to a multiple of 25bp.

      I reckon 15bp today because they are weak as p1ss and then 25bp in June.

  4. Ironorebust

    You obviously know something about the far left Labor clowns that we don’t. Either side are incompetent and to continue with this messiah view of politics is well past its use by date.

  5. Grand Funk RailroadMEMBER

    I was leaked a draft of the media statement…..

    Statement by Philip Lowe, Governor: Monetary Policy Decision

    Number 2022-09

    Date 3 May 2022

    At its meeting today, the Board decided to bind and gag the Prime Minister and roast him on an electoral spit by lifting the cash rate target by 50 basis points and the interest rate on Exchange Settlement balances to one per cent. It also decided to cease further purchases under the bond purchase program, while replacing this with an opportunity for the Australian public to directly fund the removal of the Prime Minister with a special bond issue.

    The Omicron outbreak has affected the economy, but it has not derailed the economic recovery. The Prime Minister has. The Australian economy remains resilient and spending is expected to pick up as case numbers trend lower. The RBA’s central forecast is for GDP growth of around 4¼ per cent over 2022 and 2 per cent over 2023. This outlook is supported by household and business balance sheets that are in generally good shape, an upswing in business investment, a large pipeline of construction work and supportive macroeconomic policy settings. The main source of uncertainty continues to be the Prime Minister. Analysis by the RBA has concluded he is a psychopath, that Australians feel he supports psychopaths like him, and that increasingly they are keen to take any risk – including voting for the ALP – in order to free themselves from the Prime Minister. The RBA has concluded his removal would be conducive to an improvement in consumer sentiment, and may trigger a one off spending surge revolving around champagne and canapes.

    The labour market has recovered strongly, with the unemployment rate declining to 4.2 per cent in December. Hours worked are estimated to have improved over April, with ongoing high numbers of job vacancies suggesting further gains in employment over the months ahead. The RBA’s central forecast is for the unemployment rate to fall to below 4 per cent later in the year and to be around 3¾ per cent at the end of 2023. The RBA believes the removal of the Prime Minister could materially improve employment outcomes.

    Wages growth has picked up but, at the aggregate level, has only returned to the relatively low rates prevailing before the pandemic. The RBA attributes this to widespread doubt that anybody on the Government side of politics really wants wages to increase. A further pick-up in wages growth is expected as the labour market tightens, but the imminent arrival of large numbers of putative migrants, encouraged and exhorted by the Prime Minister, will dampen likely workplace wage gains. This pick-up is still expected to be only gradual because of this, although there is uncertainty about the behaviour of wages at historically low levels of unemployment, being flooded by unskilled migrants masquerading as students or tourists..
    Inflation has picked up more quickly than the RBA had expected, but remains lower than in many other countries. The headline CPI inflation rate is 5.1 per cent and is being affected by higher petrol prices, higher prices for newly constructed homes and the disruptions to global supply chains. All of these are directly attributable to policy enacted by this Government and the specific exhortation of the Prime Minister. In underlying terms, inflation is 3.2 per cent. The central forecast is for underlying inflation to increase further in coming quarters to around 6 per cent, before declining to around 2¾ per cent over 2023 as the supply-side problems are resolved and consumption patterns normalise. One source of uncertainty is the persistence of the disruptions to supply chains and distribution networks and their ongoing effects on prices. It is also uncertain how consumption patterns will evolve and how this will affect the balance of supply and demand, and hence prices. Events in Europe have baked in higher grain and petrol prices for Australian consumers, but also higher prices for Australian grain and hydrocarbon exporters for the short to medium term, and possibly longer.

    Financial conditions in Australia remain so highly accommodative that unborn children are pre-approved for mortgages of up to 900 thousand dollars. Together, the RBA’s bond purchase program, the funding provided under the Term Funding Facility and the low level of interest rates are providing important support to the Australian economy as it recovers from the effects of the pandemic. The Australian dollar exchange rate is around its lows of the past year or so. Housing prices have risen strongly, although the rate of increase has eased in some cities. This is directly attributable to the Prime Minister. With interest rates at historically low levels, it is important that lending standards are maintained and that borrowers have adequate buffers, something the Prime Minister has tried hard to water down.

    The decision to end purchases under the bond purchase program follows a review of the actions of other central banks, the functioning of Australia’s bond market and the progress towards the goals of full employment and inflation consistent with target. Many other central banks have ended, or will soon end, their bond purchase programs. More importantly, faster-than-expected progress has been made towards the RBA’s goals and further progress is likely. In these circumstances, the Board judged that now was the right time to end the bond purchase program. Since the start of the pandemic, the RBA’s balance sheet has more than tripled to around $640 billion, with this expansion providing continuing support to the economy. The Board will consider the issue of the reinvestment of the proceeds of future bond maturities at its meeting in May.

    The Board is committed to maintaining highly supportive monetary conditions to achieve its objectives of a return to full employment in Australia and inflation consistent with the target. As the Board has stated previously, it will increase the cash rate until to underline a need to remove the Prime Minister. While inflation has picked up, it is too early to conclude that it is sustainably within the target band, but it too is directly attributable to the Prime Minister. There are uncertainties about how persistent the pick-up in inflation will be as supply-side problems are resolved. Wages growth also remains modest and it is likely to be some time yet before aggregate wages growth is at a rate consistent with inflation being sustainably at target. The Board is no longer prepared to be patient as it monitors how the various factors affecting inflation in Australia evolve. It is calling for the removal of the Prime Minister and the replacement of the Australian government.

    • Mining BoganMEMBER

      He must be very proud of his chef’s cooking to go and defend it like that.

  8. Mining BoganMEMBER

    I think the mob at work are more upset about rate hikes than they were about the WuFlu lockdowns.

    We must be in really big trouble.

    • reusachtigeMEMBER

      No one wants rate hikes at all, unless they have a societal or mental issue of course. Unfortunately the masses were conned into believing in lockdowns, the poor souls. Not out my way near the trendy beaches. We were often on the news for rebelling! We always knew it was more important to hang out with your mates getting a tan than comply with that rubbish!!

        • Mining BoganMEMBER

          Scott, Josh, Dave and Tim all say that independents are easily bought.

          Reusa will be okay.