Will the Budget Push Interest Rates Up?

Hi Scott,
 
I know you boycotted the Budget, but, being a ‘postcode povvo’ who is barely hanging on (after the rate rises, roughly 65% of our income goes to our mortgage!), I have to ask: do you think all the Budget spending will increase interest rates? We’re banking on them coming down!
 
Sim
 
Hi Sim,
 
I had low expectations for the Budget, and Jimbo did the limbo and went lower still! (Though I’m sure James Packer is very happy he’s getting $300 off his power bill, struggling as he is.)

So to your question – will this Budget push up interest rates?
 
No, it won’t.
 
Well, that’s according to the Federal Treasury, which employs hundreds of the smartest economic boffins in the land.
 
The Treasury has 123 years of experience (since 1901) working with the Government analysing the impact of their policies – and they are officially forecasting that inflation will continue to fall.
 
The problem is that their track record of economic predictions is worse than my boys’ aim at the toilet.
 
“YOU NEED TO STAND CLOSER TO THE TOILET, BOYS. THIS IS DISGUSTING!”
 
Look, to be fair, my boys do try – they just don’t have their aim in yet.
 
However, the boffins at Treasury are fully grown adults who’ve been spraying their predictions around the bathroom for over a century. There is no hope for them. Their economic forecasts are consistently and laughably wrong.
 
So what does that mean for you?
 
Absolutely nothing. With over two-thirds of your income going to your mortgage, you are weeing into the wind, Sim.
 
My advice to you?
 
Panic.
 
The key is to panic early: ask yourself what would happen if you lost your job, or you got sick, or interest rates went up. In other words, you need to do something that Jimbo hasn’t been able to do: make some hard decisions, right now.