That whistling sound you heard this morning was the PM and Peter Costello sighing with relief. Interest rates are on hold – this month. Many economists believed the Reserve Bank would jack rates up by another 0.25%, as a result of constrained economic capacity and inflationary pressures.

The sighs of relief were so loud because while oil prices are fuelling inflation, Howard Government policies, rather than external economic pressures, are behind the belief that rates will have to rise.

The single biggest cause of upward interest rate pressures in Australia is the desperate $66 billion spending spree Howard and Costello embarked on last year to get re-elected. While they’re sighing with relief now, it will look very nasty if Howard and Costello get hit with the hangover from their binge next month – at Budget time.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey

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