The upcoming interest rate rise, which will provoke weeping and gnashing of teeth in many quarters, is due to one thing only:
RESERVE Bank governor Glenn Stevens has flagged plans to push up interest rates to manage ”the largest minerals and energy boom since the late 19th century” and made it clear he will not hold off to protect states such as Victoria despite their distance from the big mines.
Addressing a business audience in Shepparton, Mr Stevens said he had ”very effective control over only one interest rate”, and that he would need to push it up nationwide to manage a boom he conceded was emanating from Western Australia…
He said the bank had only one instrument with which to manage the ”fairly robust upswing”, and the entire nation would have to wear the consequences.
That’s right: everyone who opposed any kind of meaningful mining tax. Everyone who told pollsters they were so opposed to the RSPT that Labor would have to get rid of Kevin Rudd. Everyone who voted Liberal. You wanted a two-speed economy – welcome to the consequences. If we don’t want our politicians to sensibly manage the mining boom on behalf of all of us, the RBA will have to do it with the one single instrument it has at its disposal – raising interest rates for the entire nation.
Isn’t this descent into a country with an unbridgeable and ever-worsening gap between rich and poor exciting?