That we are now likely to hit 2.5% shows just how much lifting they have had to do. This policy effectively meant the RBA had to do all the heavy lifting to try and stimulate the economy. That was the first time in over 40 years that a government has spent less in a year than it did in the previous one. The reason the RBA can lower rates is because as Treasurer Wayne Swan did actually cut spending.
Now mortgage holders might like low interest rates, but they also like having a job, and it’s tough to sell the line that things are going ok, when your own figures predict they will get worse. The Economic Statement released last Friday by the Treasurer, predicts the unemployment rate to reach 6.25% in 2014-15. The problem for the Government is that the economy is certainly not booming.