The Reserve Bank has spoken, and interest rates have finally been trimmed by 25 basis points. Some commentators were predicting this would kick off a parade of cuts, but Reserve Bank Governor Michele Bullock put that notion to bed fast. She made it crystal clear the decision wasn’t unanimous—there was serious debate about holding steady—and we shouldn’t expect a cascade of reductions anytime soon.



It was the right call, but it highlights the tightrope Australia is walking. Inflation isn’t just high; it’s embedded. For years, our only tool to control the economy has been monetary policy: raising rates to curb a boom and lowering them to fight recession. But much is now beyond the Reserve Bank’s control. Thanks to poor government policies, energy costs are soaring—everyone is feeling the pinch on food and fuel. The country is in a massive construction boom, with labour and materials in short supply; both major parties want to ramp up home building, so there’s no relief coming for building costs.




Treasurer Jim Chalmers just couldn’t help himself. Fresh from basking in falling interest rates, he’s now calling on landlords to pass on the savings in rent. If he spent less time in Canberra and more time on the ground, he’d know interest isn’t the big killer—land tax is. In Queensland, it’s off the charts because the government has kept the thresholds frozen for 16 years. It’s a rort, plain and simple.

Of course, rate cuts are a double-edged sword. They help potential borrowers qualify for mortgages, but because this increases demand, they may also drive up the price of the very house a first homebuyer hopes to purchase.



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