Interest Rate Cuts Coming. Don't Hold Your Breath.

For all those waiting for a pre-election interest rate cut … don’t hold your breath.

Yes, yes. I know several banks and economists have forecast cuts, but I have my doubts.

Why? The exchange rate.

Everything elese equal, a cut to interest rates will further push down the little Aussie Battler agains the US. It’s already down 7.12% for the year. An interest rate cut will push it down further.

Why does this matter … well because of the impact on the price of imports meaning … clothing, footwear, electricals, food, fertiliser, solar panels, cars. Pretty much most of the manufactured goods consumed in Australia.

Then the kicker onto insurance given that insurance covers replacement costs.

Let’s wait and see the coming inflation numbers given the 1 month decline of 3.47% because I can’t see how this won’t translate into price numbers.

Don’t forget also the inherent inflationary effects of the Albanese governent’s reckless spending. Throwing more and more money out while at the same time as choking production … ding ding ding … inflation.

Australia is in a world of economic hurt.

Everybody knows what needs to be done. Nobody wants to do it.

Our politicians are weak. The bureaucracy is piss poor.

Given 20 plus years of training, Australian’s won’t accept constraints on living beyond their means and in stealing from the future. Anybody who tries to deal with Australia’s economic problems will likely suffer electorally. And the benefits of being in government well exceed the costs of governing.

There is an economic trainwreck coming. The poor, the vulnerable, the young and to be born will pay the price. The retired politicians and public servants will be fine.