Here are the main suspects who killed a Cup Day rate cut: the RBA, Treasurer Chalmers, the Albanese government, Tony Burke and the Australian consumer.

As the country’s statistician has killed off any chance of an interest rate cut next Tuesday, the only hip pocket relief will come from backing the winner of the Cup. And we all know how easy that is!

But with the September quarter headline inflation rate coming in at a huge 1.3%, taking the annual rate to 3.2% (which is outside the Reserve Bank’s target for inflation of 2% to 3%), you have to know the central bank won’t cut. And if this inflation trend starts to pick up, they will cancel cuts until 2026 or even start rising again.

So, instead of boring you with why inflation is 0.2% higher than economists expected (they were tipping a 1.1% rise in the CPI), let’s see who’s to blame for this killing of a Cup Day cut. Try these usual suspects:

1. The RBA! It wants inflation well under 3%, while India, which is growing at 7%, has a 4% inflation target. Mind you, I think a 2-3% target is OK because the USA’s central bank aims for 2%. That said, it looks like the RBA needed to either raise rates more or delay the three cuts we’ve had this year.
2. Treasurer Chalmers! His tax cuts have kept spending higher and made it easier for consumers to pay higher prices.
3. The Albanese Government! Its climate change policies to decrease the use of fossil fuels, such as coal, oil and gas has forced up power bills and has not only hurt consumer and business’s bottom lines but has kept inflation up and has meant rate cuts are off the table until now.
4. The Albanese Government again! Its high immigration policy has kept demand and the economy growing, which has kept inflation higher.
5. The Prime Minister’s best friend of the union movement, Tony Burke! Burke is the man touted as a possible replacement PM to Albo. He has powered many labour market reforms, which have kept wage rises happening. This has been good for workers but bad for containing inflation.
6. Consumers! Aussies have kept borrowing and spending, which has made it easier for price-setting businesses to keep raising prices. Many of these businesses had to raise prices to offset wage, power and inflation costs.
7. The RBA and Albanese Government again! They have a combined policy attitude to keep unemployment as low as possible but in the dismal science world of economies, it’s hard to lower inflation without a significant rise in unemployment.

To cut to the chase, we didn’t have a recession linked to the 13 rate rises because the PM and Treasurer Chalmers had an election to win. To be fair, they didn’t want a recession on their watch. While they gambled that the RBA could get inflation and interest rates down, the Government didn’t help with their tax cuts, green and labour market policies.

Take a look at New Zealand, where the policy makers played a more old-fashioned game of big interest rate rises that led to a recession. They’re now getting lots of rate cuts, but their jobless rate is a lot higher than us.

The Kiwi’s cash rate went to 5.5% while we went to 4.35%. NZ’s unemployment is 5.2% while our jobless rate is 4.5%. That’s a big difference in economic statistical terms.

It might mean we need 800,000 people unemployed from our 15 million strong workforce, which mean 125,000 Aussies would have to be sacked to slow the economy down to bring inflation down and give rate cuts a chance!

While these are blunt numbers, the fact is that while those with big mortgages have really copped hip pocket pain, those with jobs and no debt have not only enjoyed an economy without a recession, but they’ve also seen high interest rates for their savings and the stock market has boomed for six years, rising over 84%!

There’s an old saying: “endure the pain, enjoy the gain” Well, our economy has had less pain overall so we’re missing out on the rate cut gains.

However, while the Coalition might now have an issue to start agreeing on, the challenge will be for them to promise voters more pain for future gains. Labor’s strategy at the state and federal level has been give voters what they want i.e. tax cuts, electricity rebates, work from home support and better wages and conditions, while committing to net zero for environmental reasons. But we know the economy has shown the price for all of that is higher inflation and interest rates.

Economics can be a zero-sum game. For there to be winners, there has to be losers. That’s why it has been labelled the dismal science.

By the way, the Yanks got a rate cut overnight and expect another before the year’s out. This comes as President Trump meters out a lot of pain on public servants, who are in the second longest shutdown of 29 days. Meanwhile, businesses are copping the pain of tariffs and an immigration crackdown taking away cheap, illegal labour participants.