Inflation is out of the box in Australia and the current Australian Treasurer has deliberately changed the mandate of the RBA to curtail the latter's ability to clamp down on this inflation - They have changed the mandate to an equal weight for inflation and wages and has given the RBA a specific mandate for financial stability which is …
Inflation is out of the box in Australia and the current Australian Treasurer has deliberately changed the mandate of the RBA to curtail the latter's ability to clamp down on this inflation - They have changed the mandate to an equal weight for inflation and wages and has given the RBA a specific mandate for financial stability which is code for the RBA printing money to bail out the banks if they get in trouble) The states are running huge infrastructure programs and running up large debts. While the Federal government is running a surplus (due to increased inflation [more GST revenue and bracket creep] and commodity price strength} it has substantially ramped up domestic spending. All of the above is very inflationary. The Australian Treasurer is in denial about the actual reasons for inflation (i.e. RBA QE during covid) and is actually handing out more money to people to offset these cost of living pressures which will add flame to the inflationary fire. The Labour Government is also ramping up minimum wages and public sector wages and has very pro labour/union policies. The cost of living pressure, due to inflation, is however, hurting people and Labour support is weakening, so we may end up with a very close result at the next election.
This is exactly what I expect pro-labour polices to look like. That why I think Australian government bond at 4% yield are a short. Even if labor loses the next election, I would not expect much change from the liberals. Deomcratic governments tend to choose popular policies….
If Labour support weakens then the Greens/ Independents will probably hold the balance of power, with neither the Liberals or Labour having a clear majority. The Greens/Independents are all pushing to shut down new coal and gas development and increase renewables spending which is all inflationary and, in addition, the Greens are pushing back strongly against RBA rate increases (as their main constituency is a young inner city demographic with high mortgages) which is also inflationary.
Inflation is out of the box in Australia and the current Australian Treasurer has deliberately changed the mandate of the RBA to curtail the latter's ability to clamp down on this inflation - They have changed the mandate to an equal weight for inflation and wages and has given the RBA a specific mandate for financial stability which is code for the RBA printing money to bail out the banks if they get in trouble) The states are running huge infrastructure programs and running up large debts. While the Federal government is running a surplus (due to increased inflation [more GST revenue and bracket creep] and commodity price strength} it has substantially ramped up domestic spending. All of the above is very inflationary. The Australian Treasurer is in denial about the actual reasons for inflation (i.e. RBA QE during covid) and is actually handing out more money to people to offset these cost of living pressures which will add flame to the inflationary fire. The Labour Government is also ramping up minimum wages and public sector wages and has very pro labour/union policies. The cost of living pressure, due to inflation, is however, hurting people and Labour support is weakening, so we may end up with a very close result at the next election.
Sorry I should have written ëqual weight for "inflation and unemployment" rather than "inflation and wages"
This is exactly what I expect pro-labour polices to look like. That why I think Australian government bond at 4% yield are a short. Even if labor loses the next election, I would not expect much change from the liberals. Deomcratic governments tend to choose popular policies….
If Labour support weakens then the Greens/ Independents will probably hold the balance of power, with neither the Liberals or Labour having a clear majority. The Greens/Independents are all pushing to shut down new coal and gas development and increase renewables spending which is all inflationary and, in addition, the Greens are pushing back strongly against RBA rate increases (as their main constituency is a young inner city demographic with high mortgages) which is also inflationary.