The NSW premier, Chris Minns, has warned an expected interest rate increase will force job losses and cause businesses to close, insisting the federal government and states should rein in spending to take pressure off the economy. The intervention from the leader of the country’s biggest state will heap yet more pressure on the Albanese government ahead of the Reserve Bank of Australia’s cash rate decision on Tuesday. Markets predict the bank will deliver the fifth rate rise in 2026.
A move to 4.85% would bring rates to their highest level in 18 years. Minns, who is increasingly outspoken on differences of opinion with the prime minister, Anthony Albanese, said increasing rates was not “a straightforward decision” for the RBA. There’ll be shops that close that do not reopen with another rate rise.
Internally, frustration is growing about the government’s handling of the economy. One Labor MP told Guardian Australia voter anger was already high ahead of the rates decision, likening the tough political climate facing the government during a slump in polling in its first term. They said Albanese and Chalmers would be hoping the trajectory for inflation and interest rates experienced before the 2025 election would play out again next year.
After peaking at nearly 8% in late 2022, inflation fell to within the Reserve Bank’s target band before voters went to the polls. Albanese will be at the Commonwealth leaders’ summit in Antigua and Barbuda on Tuesday when the RBA announces its rates decision, leaving Chalmers to speak for the government. The environment minister, Murray Watt, defended the government’s spending on Monday.
She blamed big banks and supermarket giants for adding to the pressure on households by slugging customers. Workers didn’t create this inflationary crisis, it’s caused by Trump’s war in the Middle East, but workers are feeling the pain of it every day,” she said. Australian Council of Social Service chief executive Cassandra Goldie urged the RBA not to increase interest rates, calling instead for action to lower housing and energy prices and out of pocket medical costs.
An increase towards or above 5% would be disastrous, locking people out of jobs for years and forcing them to rely on grossly inadequate income support payments.” Monday’s Newspoll put Labor’s primary vote at 27%, behind One Nation on 28%, but remaining ahead of the Coalition on 21%. The opposition leader, Angus Taylor, accused the federal government of losing control of inflation and interest rates.
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