Dan Andrews slams RBA rate rises as putting pressure on Victorian families

The Premier has slammed the RBA saying its strategy to combat rising inflation has failed and instead is causing enormous pain to struggling Victorian families.

Daniel Andrews has taken a major swipe at the Reserve Bank after it delivered its 11th interest rate rise in 12 months.

The Premier said the RBA’s strategy to combat rising inflation was failing and instead was leading to greater pressures on Victorian families.

“I don’t know that pulling this lever is necessarily delivering the outcome that the bank wants, and that’s to get inflation under control,” he said.

“I’m not sure that these interest rate rises are smashing inflation. I am absolutely certain that these interest rate rises are smashing families.

“I’m certain they’re creating lots of other problems. Many, many families are under enormous pressure at the moment.

“They borrowed in good faith with the expectation, and from no less of an authority than the Reserve Bank, that interest rates wouldn’t be going up. They’ve now gone up 11 times in 12 months.

“This is causing an enormous amount of pain. The problem with this policy level, the problem with these tools is you don’t know that you’ve gone too far until you’ve gone too far.”

Treasurer Jim Chalmers said the rise was a ‘brutal reminder’ of the inflation challenge. Picture: Martin Ollman

Treasurer Jim Chalmers conceded the RBA’s shock move was a “brutal reminder” of the inflation challenge.

“I think that the rate rise is really a pretty stark, pretty brutal reminder of the difficult economic conditions,” he said.

“And I think people are broadly aware that we‘ve got an inflation challenge in our economy, people feel it every day.”

Mr Andrews said during a 2020 national cabinet meeting, state governments were told they would need to borrow money to avoid a 25 per cent unemployment rate.

He indicated that his government would not have borrowed as much money as it did at the time.

“The government of Victoria made decisions, but the advice that informed those decisions were very simple – you’ve got to borrow to get through,” he said.

“So of course we went and borrowed.”

The Premier said the rate rises were putting pressure on families. Picture: Valeriu Campan

Mr Andrews made the comments while attempting to deflect from Victoria’s upcoming horror budget which will be delivered on May 23.

“This is a very, very challenging budget,” he said, making reference to the need to pay back pandemic borrowings worth tens of billions of dollars.

It comes as leading finance expert Mark Bouris smashed the hike, arguing it was “completely unnecessary”.

“Wow, another 25 basis points – are they serious? … Do they want to break the backbone of Australian mortgage holders?” he said on social media.

“They’re saying inflation is still too high at 7 per cent … they’re saying that unemployment is still too low at 3.5 per cent … for me they should have just paused and waited to see what happens with the interest rate increases they’ve already jammed us with.

“This is going to cause something to break, from my point of view, and I think they’ve just gone way too far.”

Yellow Brick Road executive chairman Mark Bouris slammed the RBA. Picture: Hollie Adams

Greens Senator Nick McKim said the government needed to step in to overrule the “terrible decision”.

“The RBA’s decision to raise interest rates again beggars belief and will smash renters and mortgage holders even harder than they were being smashed already,” he said.

“If Dr Chalmers refuses to act it will be a tacit endorsement of the RBA’s decision and will mean that he supports the rate rises.”

FBAA managing director Peter White said Australians were “sleepwalking into disaster”.

“Governments and lenders knew this was coming because the global indicators were there, but somewhere along the line there was a failure to prepare Australians who had become complacent after more than a decade without seeing any rate rises,” he said.

“We are sadly now seeing the results … it will take a combined approach by the government, lenders and the community at large to help people through this.”

Originally published as Dan Andrews slams RBA rate rises as putting pressure on Victorian families