Key events
The Department of Parliamentary Services wasn’t happy with my comment yesterday about the airflow in the building (in relation to people not wearing masks despite the advice and Covid infections) and has sent through this statement:
“DPS regularly engages independent experts to monitor air quality in Parliament House. This monitoring reinforces the effectiveness of the Parliament House ventilation system, with all air quality measures, including in the Press Gallery, well within required thresholds.”
Moderates in Coalition may be open to Labor’s climate policy
Labor’s climate policy is yet to go through the Coalition party room but Peter Dutton made a decision the party would not support it.
That has left some moderates unsettled – Bridget Archer and Andrew Bragg have not ruled out crossing the floor.
Warren Entsch has told Murph and Sarah Martin he has an “open mind” on the legislation – from their report:
The veteran Liberal MP Warren Entsch says he is open-minded about Labor’s bill to enshrine a 43% emissions reduction target if he can be convinced the Albanese government has a concrete plan to achieve the cut without driving up power prices.
Ahead of the first substantive Coalition party room meeting of the 47th parliament on Tuesday, Entsch told Guardian Australia he was seeking advice on the bill and might lend support if there was evidence to suggest the number wasn’t a “brain fart”.
RBA expected to lift interest rates today
Peter Hannam
Unless you’re living under a rock you’ll have probably heard that the Reserve Bank board will very likely raise its main interest rate later today at 2.30pm, AEST.
We previewed the meeting here, noting among other things that energy prices might be ebbing (deflating some of the need for an extension of the 22.1 cent/litre petrol excise cut beyond its 28 September expiry).
We haven’t had a rate rise of larger than 50 basis points (or half a percentage point) since 1994 when there were a couple of 1 percentage point rate hikes.
They came within a five-month period when there were three RBA rate rises totalling 2.75 percentage points – that’s the last time the central bank was this active.
Back then, though, the following move didn’t come until July 1996 when the RBA began the first of six rate cuts that stretched out over about 2.5 years.
Nobody, though, is expecting Tuesday’s move – the fourth rate rise in four months – to be the last increase.
Investors have a market they can bet on what the RBA will do, and as of yesterday evening they were wagering on a 65 basis point rise today to 2% as a 67% chance.
Ahead of today’s RBA meeting, investors are predicting the cash rate will rise again, with a two-in-three chance it will rise 65bp to a nice round 2%. Most economists, though, predict a 50bp rise to 1.85%, as the central bank undertakes it fastest series of increases since 1994. pic.twitter.com/vcNWtfTYfA
— Peter Hannam (@p_hannam) August 1, 2022
And expect more rate rises to come – just how many and how large will play out for the rest of the year and into the next one.
Good morning
Happy Tuesday!
The political parties will hold their party room meetings and work out positions on issues and legislation, but it’s all about the Reserve Bank of Australia and the slated rate rise today.
With inflation having risen since the last quarter, all economists seem to agree there is another rise coming from the RBA, which is hoping that sharp rises now will head off problems down the track.
But that just means people are being hit twice – in their daily spend and their mortgages. It seems incredible that after all these years there doesn’t seem to be any other ideas of how to handle rising inflation other than to raise interest rates, but here we are.
There are a lot of eyes on the governor, Philip Lowe, and the RBA board as to how high the rate rise will be this month given the already sharp increases. We know that the RBA believes it needs to take the cash rate to 3% before the end of the year, so mortgage holders are being told to brace for more pain.
Meanwhile, the government is under pressure to extend the fuel excise pause the previous government had in place. It’s due to expire in September (the date the Morrison government set) but with petrol prices still high despite the 22c cut, the Albanese government is being asked to keep the pause going. Treasurer Jim Chalmers says that will cost the budget too much given all the other pressures it is under, but given household budgetary pressures, it may be a fight Labor isn’t willing to have this early in the term.
And of course, there is still climate and the issue of gas supply.
We’ll cover all of that and more as the day unfolds. You have Mike Bowers with you, with Katharine Murphy leading the way. Sarah Martin, Paul Karp, Josh Butler and Tory Shepherd will help guide you through exactly what is happening while me, Amy Remeikis, drinks too much coffee and tries to keep up.
I’m on cup number three already, if anyone was wondering.
Ready?
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