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On Tuesday, the Reserve Bank of Australia (RBA) raised the cash rate to 0.35 percent.
The measure is intended to combat rising inflation, which has reached a 21-year high.
RBA Governor Philip Lowe stated that, while inflation had risen faster than expected, unemployment was low and there was evidence that wage growth would improve.
In a statement, he said it was time to withdraw “some of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic.”
Despite the fact that Australia’s economic outlook remains positive, Mr Lowe predicted that interest rates would rise further.
The last time loan costs rose during a political race was in 2007, when it was broadly seen to adversely affect John Howard before he lost power.
Prime Minister Scott Morrison dismissed suggestions that the decision would have an impact on his re-election chances on May 21.
The hike, according to Labor, demonstrated that a “full-fledged cost of living crisis” had developed under Mr Morrison’s watch.
The government’s campaign is based on how well the economy has performed, specifically how quickly it recovered after Covid.
However, this picture is rapidly and painfully changing for Australians and the government.
For days, the prime minister has been emphasising that the RBA’s decision has nothing to do with his administration’s handling of the economy.
He blamed “the extraordinary global environment” of Covid lockdowns in China, as well as the conflict in Ukraine.
Those who are struggling to pay their rent and keep up with their household bills, on the other hand, will likely see a leadership that is unwilling to accept responsibility.
This may be a boon to the opposition’s campaign, but whoever wins on May 21 will face an anxious populace reeling from high living costs and wages that have failed to keep pace.