Finance

Interest rate rise time bomb waiting for whoever wins next federal election

Politicians love nothing more than winning elections.

There’s the glow that comes with knowing the public has trusted you with office over your political opponents, and the excitement of what a term might bring.

There are policies to enact and promises to keep, jobs to hand out and history to write.

But whoever wins the next federal election, which has to be held by May, has a whole bunch of political curve balls already heading their way.

The last thing a newly-elected government wants to do is watch life become more expensive for millions of constituents, knowing they will likely cop the blame.

And yet that is exactly what lies in wait for whoever is Prime Minister come June 2022.

What goes down must come back up

At the start of 2020, interest rates were already very low. The Reserve Bank had the cash rate target at 0.75 per cent.

By late March 2020, as the pandemic was unfolding within Australia and across the globe, it had been slashed to 0.25 per cent, and by late 2020 is was at 0.1 per cent.

A lot of people saved a lot of money, as their mortgage repayments shrunk.

But historic lows can’t last.

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