Inflation is the highest it has been since 2009
According to ABS data released today, inflation is the highest it has been since 2009.
This will place pressure on the Reserve Bank (RBA) to raise interest rates to bring inflation back towards its target range of 2-3%.
But this will be a huge balancing act for the RBA as increase interest rates will in my view:
- Reducing the spending capacity of borrowers, putting pressure on consumer demand, which will constrain the growth of our economy.
- Put more pressure on already struggling small and medium business owners who only survived the last 2 years on the back of debt.
The RBA will need to balance out whether it acts to put the inflation rate back towards its target range now, and at the same time hurting the growth prospects of the country, or let it ride a bit longer.
Although, historically the RBA tries to avoid rate changes in an election cycle as a rate increase in early May, just before we go to the polls, may hurt the current government.
If you want a confidential discussion on your business situation, or help to work out your labour rate reach out to me below.
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