1 00:00:00,040 --> 00:00:02,600 Speaker 1: You know that nationally, we learned late yesterday that the 2 00:00:02,640 --> 00:00:06,039 Speaker 1: Reserve Bank has obviously raised the interest rate by zero 3 00:00:06,040 --> 00:00:09,960 Speaker 1: point five percent of a percentage point, taking its cash 4 00:00:10,039 --> 00:00:13,160 Speaker 1: rate target to two point three five percent. Now, according 5 00:00:13,160 --> 00:00:16,680 Speaker 1: to analysis by Rate City, the latest increase is going 6 00:00:16,680 --> 00:00:19,040 Speaker 1: to add a further two hundred and sixteen dollars a 7 00:00:19,079 --> 00:00:22,400 Speaker 1: month to a seven hundred and fifty thousand dollars mortgage. 8 00:00:22,640 --> 00:00:25,000 Speaker 1: So we know that this is obviously just one of 9 00:00:25,040 --> 00:00:27,200 Speaker 1: the concerns that a lot of Territorians have gone at 10 00:00:27,240 --> 00:00:30,160 Speaker 1: the moment when it comes to the cost of living. Now, 11 00:00:30,240 --> 00:00:32,960 Speaker 1: joining me on the line to talk a little bit 12 00:00:33,000 --> 00:00:38,040 Speaker 1: more about this, Charles Durwin University's lecturer in Finance and Economics, 13 00:00:38,600 --> 00:00:42,320 Speaker 1: Doctor Diba Jotty Chuck Rabati. Good morning to you, doctor, 14 00:00:42,640 --> 00:00:45,440 Speaker 1: Good morning to your petty, Deba Jotty. Now talk us 15 00:00:45,479 --> 00:00:48,959 Speaker 1: through what does the Reserve Bank, Well, why are they 16 00:00:49,040 --> 00:00:51,680 Speaker 1: continuing to raise this this interest rate. 17 00:00:52,360 --> 00:00:54,040 Speaker 2: Well, as you know that we have been going to 18 00:00:54,240 --> 00:00:57,880 Speaker 2: period a very high inflation. Last quarter it was setting 19 00:00:57,920 --> 00:01:01,360 Speaker 2: at around six point one percent, and the Reserve Bank 20 00:01:01,480 --> 00:01:04,360 Speaker 2: is expecting the inslation rate to go up further toward 21 00:01:04,959 --> 00:01:06,959 Speaker 2: towards the end of this year and it's expecting it 22 00:01:07,000 --> 00:01:09,720 Speaker 2: to pea gate around seven point seventy five percent, and 23 00:01:09,800 --> 00:01:13,160 Speaker 2: the Reserve Bank has a target inflation rate between two 24 00:01:13,160 --> 00:01:17,120 Speaker 2: to three percent, and it doesn't want the Australian economy 25 00:01:17,160 --> 00:01:20,039 Speaker 2: to get into a wage inflation spiral, so it's trying 26 00:01:20,080 --> 00:01:21,959 Speaker 2: to control pull it back. It's trying to get the 27 00:01:21,959 --> 00:01:25,160 Speaker 2: inflation rate under control. And that's why one of the 28 00:01:25,200 --> 00:01:27,600 Speaker 2: only mechanisms it has to do it is to raise 29 00:01:27,600 --> 00:01:29,400 Speaker 2: the interest rates, and that's what it's doing. 30 00:01:29,720 --> 00:01:32,560 Speaker 3: And so I suppose you know, what is it? 31 00:01:33,200 --> 00:01:35,920 Speaker 1: What's the iem You said that it's you know, the 32 00:01:35,920 --> 00:01:38,080 Speaker 1: wages are continuing to go up. I guess for us 33 00:01:38,080 --> 00:01:40,200 Speaker 1: here in the territory, some would argue that that is 34 00:01:40,240 --> 00:01:44,280 Speaker 1: not the case. So so by keeping the interest rates well, 35 00:01:44,440 --> 00:01:46,720 Speaker 1: continuing to put them up, it sort of means that 36 00:01:46,720 --> 00:01:50,000 Speaker 1: all of our living expenses continue to rise as well. 37 00:01:50,040 --> 00:01:52,080 Speaker 3: Does Nash Oh. 38 00:01:52,120 --> 00:01:54,000 Speaker 2: I'm not saying that the wages have been going up. 39 00:01:54,040 --> 00:01:56,440 Speaker 2: In fact, the wage growth has been quite sluggish. The 40 00:01:57,040 --> 00:01:59,520 Speaker 2: prices have been going up and that's what's been causing 41 00:01:59,520 --> 00:02:02,160 Speaker 2: the inslation rates to go up. And the prices have 42 00:02:02,240 --> 00:02:05,440 Speaker 2: been going up because of a variety of factors, you know, 43 00:02:05,600 --> 00:02:09,640 Speaker 2: the international factors like the war in Ukraine, oil prices, 44 00:02:09,800 --> 00:02:13,600 Speaker 2: supply chain bottlenecks. So the cost of living has been 45 00:02:13,600 --> 00:02:15,760 Speaker 2: going up, the inflation rate has been growing up. And 46 00:02:15,800 --> 00:02:19,079 Speaker 2: that's one of the other real challenges facing the government 47 00:02:19,120 --> 00:02:21,680 Speaker 2: and the Reserve Bank that while the cost of living 48 00:02:21,760 --> 00:02:24,120 Speaker 2: is going up, the wagers have struggled to keep up 49 00:02:24,160 --> 00:02:28,000 Speaker 2: with it. And unfortunately the Reserve Bank has no other 50 00:02:29,480 --> 00:02:32,440 Speaker 2: mechanism or tool at its disposal, so the only thing 51 00:02:32,480 --> 00:02:34,720 Speaker 2: it can do is to increase the interest rates and 52 00:02:34,760 --> 00:02:37,239 Speaker 2: hope that the spending falls. 53 00:02:37,880 --> 00:02:40,080 Speaker 3: And what is the time of you know, hoping that 54 00:02:40,080 --> 00:02:41,160 Speaker 3: that spending falls. 55 00:02:43,720 --> 00:02:46,560 Speaker 2: It's the idea here is that if the interest rates 56 00:02:46,639 --> 00:02:51,440 Speaker 2: go up, it becomes more expensive for houses who have 57 00:02:51,480 --> 00:02:56,200 Speaker 2: taken out a mortgage, so they will cut down on 58 00:02:56,240 --> 00:03:01,480 Speaker 2: their discretionary spending. Maybe other households will feel that they 59 00:03:01,480 --> 00:03:03,720 Speaker 2: have less wealth and they will cut down on their spending. 60 00:03:03,800 --> 00:03:07,160 Speaker 2: And so that will help bringing back the inflation rate 61 00:03:07,240 --> 00:03:09,120 Speaker 2: a little bit lower and under control. 62 00:03:09,639 --> 00:03:11,440 Speaker 1: And what kind of impact do you reckon that it's 63 00:03:11,440 --> 00:03:13,640 Speaker 1: going to have, you know, for us here in the 64 00:03:13,639 --> 00:03:16,280 Speaker 1: Northern Territory, because as we speak about quite a bit 65 00:03:16,320 --> 00:03:18,440 Speaker 1: on the show, and we're talking about it earlier this morning. 66 00:03:18,480 --> 00:03:20,520 Speaker 1: You know, the cost of living in so many different 67 00:03:20,520 --> 00:03:24,920 Speaker 1: ways continues to rise, eye petrol prices as well. 68 00:03:26,080 --> 00:03:28,320 Speaker 2: And the petrol prices are likely to go up towards 69 00:03:28,320 --> 00:03:31,320 Speaker 2: the end of this month when the full exercise cut 70 00:03:31,400 --> 00:03:36,240 Speaker 2: is going to go away. So the full exercise you 71 00:03:36,280 --> 00:03:38,520 Speaker 2: will remember that in the budget the full excise was 72 00:03:38,520 --> 00:03:41,000 Speaker 2: cut to cut by half and it was only for 73 00:03:41,160 --> 00:03:44,720 Speaker 2: six months, so that so far the government has not 74 00:03:44,800 --> 00:03:47,280 Speaker 2: said anything whether they will continue with it. So the 75 00:03:47,320 --> 00:03:49,920 Speaker 2: petrol prices most likely will go up at the end 76 00:03:49,920 --> 00:03:50,440 Speaker 2: of this month. 77 00:03:50,760 --> 00:03:51,000 Speaker 3: Yeah. 78 00:03:51,040 --> 00:03:56,480 Speaker 2: Well, yeah, as you said that, the cost of living 79 00:03:56,520 --> 00:04:01,600 Speaker 2: prices are high in the territory and households will face, 80 00:04:02,720 --> 00:04:05,119 Speaker 2: you know you challenges, especially houses who have taken out 81 00:04:05,640 --> 00:04:09,080 Speaker 2: loans on variable rates, they will face, you know, quite 82 00:04:09,080 --> 00:04:09,920 Speaker 2: a challenging time. 83 00:04:10,600 --> 00:04:12,280 Speaker 1: What do you think that it could mean for the 84 00:04:12,320 --> 00:04:15,200 Speaker 1: Northern Territory's economy. 85 00:04:16,080 --> 00:04:20,120 Speaker 2: It's not going to be very easy. As you know 86 00:04:20,200 --> 00:04:24,159 Speaker 2: that we also depend on tourism. Tourism is a type 87 00:04:24,160 --> 00:04:28,679 Speaker 2: of spending which is discretionary and anytime houses are feeling 88 00:04:29,560 --> 00:04:32,240 Speaker 2: a bit under the crunch, they will try to postpone 89 00:04:32,240 --> 00:04:36,040 Speaker 2: their trips. So yeah, it's going to have some impact 90 00:04:36,080 --> 00:04:39,640 Speaker 2: on territory's economy, and let's hope that this impact is 91 00:04:39,680 --> 00:04:42,400 Speaker 2: not two adverse. 92 00:04:42,800 --> 00:04:44,920 Speaker 1: Yeah, and I suppose that's what we're all a bit 93 00:04:44,920 --> 00:04:47,920 Speaker 1: concerned about at this point in time. Deba, Jossy, can 94 00:04:47,960 --> 00:04:50,600 Speaker 1: you tell us as well, is there, like, is there 95 00:04:50,600 --> 00:04:53,080 Speaker 1: any expectation when we might see, you know, the interest 96 00:04:53,160 --> 00:04:56,160 Speaker 1: rates start to sort of you know, to stagnate, or 97 00:04:56,200 --> 00:04:57,640 Speaker 1: when we might see them go down. 98 00:05:00,360 --> 00:05:07,440 Speaker 2: Well, that's a billion dollar question. The major banks are 99 00:05:07,440 --> 00:05:09,680 Speaker 2: predicting that the interest rates will go up as high 100 00:05:09,760 --> 00:05:13,640 Speaker 2: as four percent by the end of this year, but 101 00:05:14,320 --> 00:05:17,680 Speaker 2: some economists feel that things may not be that bad. 102 00:05:17,839 --> 00:05:21,960 Speaker 2: But it's around next year we can expect the interest 103 00:05:22,080 --> 00:05:25,840 Speaker 2: it's to stabilize, but it all depends on what happens 104 00:05:25,839 --> 00:05:28,960 Speaker 2: to the inflation rate. If inflation rate keeps going up, 105 00:05:29,560 --> 00:05:32,360 Speaker 2: then you know, we don't know. If you look at 106 00:05:32,360 --> 00:05:34,800 Speaker 2: the speech made by there is a Bank governor yesterday, 107 00:05:35,720 --> 00:05:38,840 Speaker 2: they are also extremely uncertain about it. Maybe themselves don't 108 00:05:38,880 --> 00:05:40,799 Speaker 2: know exactly what's going to happen. 109 00:05:40,920 --> 00:05:42,320 Speaker 3: It must be an interesting time. 110 00:05:42,440 --> 00:05:44,400 Speaker 1: I mean for somebody who like yourself, who is in 111 00:05:44,480 --> 00:05:46,839 Speaker 1: data lecturer in finance and economics, it must be an 112 00:05:46,880 --> 00:05:49,200 Speaker 1: interesting time to sort of, you know, be keeping an 113 00:05:49,240 --> 00:05:51,360 Speaker 1: eye on this kind of thing, given the fact that 114 00:05:51,480 --> 00:05:54,919 Speaker 1: even with those interest rates, I mean, we've not seen 115 00:05:55,480 --> 00:05:59,080 Speaker 1: that continuous rise now for such a number of years, 116 00:05:59,080 --> 00:05:59,480 Speaker 1: have we. 117 00:06:01,200 --> 00:06:05,440 Speaker 2: No, And in fact, it is really interesting because we 118 00:06:05,480 --> 00:06:09,080 Speaker 2: haven't seen such economic circumstances for a long long time. 119 00:06:09,320 --> 00:06:09,719 Speaker 3: Yeah. 120 00:06:09,800 --> 00:06:12,760 Speaker 2: And although the inflation rate is high, the industries are 121 00:06:12,800 --> 00:06:15,480 Speaker 2: going up, but we have a very low unemployment rate, 122 00:06:15,520 --> 00:06:18,839 Speaker 2: and so we're getting a lot of conflicting news. The 123 00:06:18,880 --> 00:06:22,320 Speaker 2: businesses are saying that they're defining it difficult to get workers. 124 00:06:22,360 --> 00:06:24,360 Speaker 2: At the same time, the wages are not going up 125 00:06:24,360 --> 00:06:27,800 Speaker 2: that much. Inflation rate is high. So this is really 126 00:06:28,360 --> 00:06:30,719 Speaker 2: a unique circumstance, I must. 127 00:06:30,560 --> 00:06:32,279 Speaker 3: Say, Yeah, it seems that why. 128 00:06:32,320 --> 00:06:34,040 Speaker 1: And we were just talking a couple of moments ago 129 00:06:34,160 --> 00:06:37,840 Speaker 1: as well, you know, to NTY farmers and talking about 130 00:06:37,880 --> 00:06:40,160 Speaker 1: that workforce shortage and the impact that it can have 131 00:06:40,240 --> 00:06:42,920 Speaker 1: on some of our various industries. But at the moment 132 00:06:43,000 --> 00:06:44,880 Speaker 1: it seems to be right across the board, a lot 133 00:06:44,920 --> 00:06:47,920 Speaker 1: of different industries in the Northern Territory are struggling when 134 00:06:47,920 --> 00:06:49,040 Speaker 1: it comes to the workforce. 135 00:06:50,400 --> 00:06:53,960 Speaker 2: Absolutely, yes, and I think there are some moves that 136 00:06:54,000 --> 00:06:56,360 Speaker 2: have been made by the government to ease the visa 137 00:06:56,480 --> 00:07:02,960 Speaker 2: restrictions and help improving labor shortage situation. But yes, you're 138 00:07:02,960 --> 00:07:08,240 Speaker 2: absolutely right businesses across the border facing that problem. 139 00:07:07,320 --> 00:07:11,120 Speaker 1: Well deeper, Jotty, Chuck ROBERTI, we really appreciate your time 140 00:07:11,160 --> 00:07:14,760 Speaker 1: this morning, of course. Charles Darwin, University lecturer in finance 141 00:07:14,880 --> 00:07:16,680 Speaker 1: and Economics. 142 00:07:16,360 --> 00:07:18,200 Speaker 3: Thank you so much for your time this morning. We 143 00:07:18,280 --> 00:07:21,960 Speaker 3: really appreciate it. Thanks for having Thank you