The Times Australia
Business and Money

Economist Chris Richardson on a likely interest rate rise and the fall in living standards

  • Written by Michelle Grattan, Professorial Fellow, University of Canberra

The International Monetary Fund (IMF) released a report this week calling on Australia to raise interest rates again, adding to the speculation the Reserve Bank will increase the cash rate on Tuesday.

If that happens it will be yet another blow to many household budgets, already under strain from the rises in the prices of food, fuel and power.

In this podcast, independent economist Chris Richardson joins The Conversation to discuss the expectations about a rate rise, “sticky” inflation, the fall in the standard of living, the difficulty of the government responding to the cost-of-living crisis, and a bleak prospect as we go into 2024, before we reach some light at the end of a long tunnel.

Asked whether a rate rise next week is virtually a foregone conclusion or whether there’s still some doubt, Richardson says:

Never say never on something like interest rates. But the new Reserve Bank governor did pretty clearly put a line in the sand and then almost straight away, the inflation numbers seemed to cross that line. So like most economists, I do expect Tuesday […] we’ll see a further rise in interest rates.

On the issue of living standards in Australia he says:

I’m surprised that there is not more discussion of arguably the key number in economics, our living standards – basically the amount of money that people have, disposable income. So you take out tax, you take out interest payments, you look at that per head, you put it in today’s prices – that peaked in September ‘21. It was artificially high during COVID, but it is down almost 10% since then. And that fall is rather larger than anything Australia saw in recessions in decades past.

Asked what can or should the government do about the cost-of-living crisis, Richardson say:

It can’t do much. When we talk about a cost-of-living crisis, we’re saying that inflation is dragging down our living standards and that that’s a problem. Now, if governments could solve that, not just Australian governments, past governments as well as the current one, other governments around the world, if they had a magic wand, they would have been waving that magic wand pretty madly. They don’t. And that’s the trick.

In current circumstances, if you give people extra money, well, of course they’ll spend it […] and that would simply push inflation up again. And indeed, if the government did enough of that it wouldn’t just push inflation up again, it could make the Reserve Bank raise rates again. In other words, a cost-of-living problem is a wicked one for governments to do something about.

Authors: Michelle Grattan, Professorial Fellow, University of Canberra

Read more https://theconversation.com/politics-with-michelle-grattan-economist-chris-richardson-on-a-likely-interest-rate-rise-and-the-fall-in-living-standards-216836

Business Times

Your CEO Has More Reach Than Your Ad Budget – You’re Just Not Usi…

By Patrice Pandeleos, Managing Director of Seven Communications If your CEO hides behind a logo while competitors build infl...

From Farms to Festivals: How Regional NSW Is Repurposing Shipping…

Regional NSW communities are repurposing containers for farms, tourism, and events Farmers and small businesses use them...

Nail it with points: Flybuys members can redeem points for instan…

Flybuys launches new in-store redemption at Bunnings stores across Australia Tuesday 19 August, 2025 – Flybuys, Australia’s ...

The Times Features

How much money do you need to be happy? Here’s what the research says

Over the next decade, Elon Musk could become the world’s first trillionaire[1]. The Tesla board recently proposed a US$1 trillion (A$1.5 trillion) compensation plan, if Musk ca...

NSW has a new fashion sector strategy – but a sustainable industry needs a federally legislated response

The New South Wales government recently announced the launch of the NSW Fashion Sector Strategy, 2025–28[1]. The strategy, developed in partnership with the Australian Fashion ...

From Garden to Gift: Why Roses Make the Perfect Present

Think back to the last time you gave or received flowers. Chances are, roses were part of the bunch, or maybe they were the whole bunch.   Roses tend to leave an impression. Even ...

Do I have insomnia? 5 reasons why you might not

Even a single night of sleep trouble can feel distressing and lonely. You toss and turn, stare at the ceiling, and wonder how you’ll cope tomorrow. No wonder many people star...

Wedding Photography Trends You Need to Know (Before You Regret Your Album)

Your wedding album should be a timeless keepsake, not something you cringe at years later. Trends may come and go, but choosing the right wedding photography approach ensures your ...

Can you say no to your doctor using an AI scribe?

Doctors’ offices were once private. But increasingly, artificial intelligence (AI) scribes (also known as digital scribes) are listening in. These tools can record and trans...