A real treat for die hard economists last week with both monetary and fiscal policy in play!
The RBA left the cash rate unchanged once again last week at 1.5%, as was almost universally expected. Interesting to note that the last RBA move, a rate cut, was in August 2016 and around the time the iPhone 7 was released.
And for the Budget, the first line of the Treasurer’s speech last week would have pleased every ACDC fan, announcing the budget is “back in (the) black”, a surplus for 2019/20 - the first time since the GFC. Sorry, as an old ACDC fan, I couldn’t help myself.
The Budget is an odd mix of tax cuts for lower and middle income tax earners and increased spending aimed to help the Coalition win an election and let them off the hook if they lose. It’s growth figures and the projected debt pay-off are ambitious, as is the forecast return to 3.5% wage growth in the current environment. Also imaginary is any hope of improving the government's political fortunes as the Coalition is a long way behind in the polls as the election race starts. But a week is a long time in politics, let alone a month.