Shadow treasurer Jim Chalmers reveals ‘silver lining’ in interest rate rise

It might all sound grim, but Shadow treasurer Jim Chalmers has revealed a “silver lining” surrounding today’s interest rate rise.

Shadow treasurer Jim Chalmers has revealed a “silver lining” surrounding Tuesday’s interest rate rise.

The RBA on Tuesday afternoon announced it would lift Australia’s official record low cash rate by 25 basis points to 0.35 per cent from 0.1 per cent.

It is the first rate rise in 11 years – since November 2010 – and is a desperate attempt to clamp down on skyrocketing inflation, which has reached an annual rate of 5.1 per cent and has sent prices climbing at the fastest rate in two decades.

Prime Minister Scott Morrison argues many of the cost of living pressurs affecting Australians are being caused by international factors which are out of the government’s control.

Mr Chalmers spent Tuesday slamming the Morrison government, arguing an Albanese government would be more capable at handling Australia’s fragile economy.

Appearing on ABC’s 7.30 program on Tuesday night, Mr Chalmers said one of the positives to come out of the change was that those living off savings would be better off.

“The usual rule of thumb is for every $20,000 you've got saved for an interest rate rise of this magnitude, it is $50 a year,” he said.

“It is not a massive amount of money, but it is better than nothing.”

Shadow treasurer Jim Chalmers said those living off savings would be better off with higher interest rates. Picture: ABC

Mr Chalmers went on to say Tuesday’s rate rise would make life harder for millions of Australian families.

While acknowledging the RBA’s decision was to be expected, Mr Chalmers said the government had a responsibility to address some of the surrounding factors.

“We don‘t judge Scott Morrison for not taking responsibility for all of it. We judge him for not taking any responsibility for any of it,” he said.

“We have a full blown cost of living crisis in this country. We’ve got skyrocketing inflation, falling real wages and now interest rate rises are part of the pain on Scott Morrison’s watch.”

Treasurer Josh Frydenberg also appeared on the program, describing the rate rise as a “normalisation” of monetary policy following the pandemic.

He noted that other countries had similar or even greater increases in their official interest rates in recent months, including the US, UK, Canada and New Zealand.

Treasurer Josh Frydenberg noted that other countries had even greater rate rises in the wake of the pandemic. Picture: ABC

“This is the normalisation of monetary policy that comes with the worst of the pandemic being behind us. Just as we normalise fiscal policy by bringing to an end that emergency economic support like JobKeeper,” Mr Frydenberg said.

“It’s completely unrealistic to expect that a cash rate at just 10 basis points would stay there indefinitely.”

A recent cut to the fuel excise and $250 handout to pensioners were examples of the government easing the cost of living, according to the Treasurer.

Originally published as Shadow treasurer Jim Chalmers reveals ‘silver lining’ in interest rate rise