We all hear our Reserve Bank is trying to control inflation through reducing discretionary spending by increasing interest rates, which impacts small business and the 30% of households who have mortgages more than others
The first thing I don’t understand is using total spending to measure demand, surely, we are buying less goods and there is less demand, it is just that the average good is getting a lot more expensive - so is the measurement flawed?. Secondly, that with 400,000 coming in on visas then it seems to some degree we should also be looking at spending per item per capita not just total spending.
Surely other levers are available and could also be used? Please some financial expert tell me that these are not additional options that will reach a broader subset of the economy:
- ensure higher deposit rates from banks or Australian bonds, so people are more inclined to save (and the banks seem to have enough profitability to support this)
- increase superannuation contribution limits temporarily so more people are incentivised to put money away for longer (could it vary between say $20k and $40k pending how expansionary or contractionary we want the budget to be)?
Thanks.