There’s a worrying weeklong wait for homeowners with big debts. And there’s an equally scary wait for the guy who not only has his job on the line but whose actions could mean a lot more Aussies will see theirs at risk too. The wait is for Tuesday week’s RBA interest rate decision. And the man in question is, of course, Dr Phil Lowe.

These timely questions come as Dr Phil learnt that the Albanese Government will change how the RBA sets interest rates and runs the central bank, with his job up for renewal in September. It also comes as the data drips are showing our economy is starting to feel the pinch from 10 interest rate rises in under a year, with more building companies going broke. And more could face the same fate, if the AFR’s story is correct: “Homeowners are delaying renovations for up to two years, including essential repairs, over concerns about surging interest rates and living costs, even as the collapse of some large building companies has made more tradespeople available.”

Writing in the AFR, Nila Sweeney informs us that: “A new national poll from tradie service provider Hipages found 43 per cent of homeowners are shelving renovations amid rising costs, and 28 per cent are delaying for one to two years.”

Some 20% fear a cash crisis will mean renovations won’t get finished, while 37% think they’d be lucky to get half their job done. As a consequence, 59% said they would do cosmetic renovations. This doesn’t augur well for builders who are already under a lot of pressure.

This comes as two more builders in Melbourne (Eight Homes and Urbanedge Homes) go into voluntary administration. Mahercorp, the parent company of both builders, thinks they can trade out of their problems but only time will tell if they can. What the RBA does over the rest of this year will be critically important to builders and homeowners.

In March, Porter Davis Homes went into liquidation, with 1,700 customers with unfinished homes. And yep, you have to blame those rapid inflation-fighting rate rises for these building industry problems.

The AFR says the building company failures in the first nine months of this year are greater than any in the past seven years. Clearly, this is because of the work of Dr Phil Lowe and his RBA board. Of course, economists always knew this kind of thing was going to happen when a central bank uses big rate rises to kill inflation that was boosted by low interest rates to offset the impact of the pandemic’s lockdown and explosion of costs.

This is Dr Phil’s dilemma: he needs to bring down inflation as quickly as he can but not drive the economy into a recession that will KO a lot more builders, along with other businesses and their employees. This is the ugly real-world picture that’s painted by aggressive monetary or interest rate policy.

It aimed to make households feel the pinch to stop them spending in order to bring prices down, but Dr Phil needs to do that without burning the economy into a recession.

That’s why he’ll be sweating on the data drop on Wednesday when he sees the Consumer Price Index (CPI) readings for the month of March and the March quarter. The February CPI was 6.8% so he’ll want a number lower than that to show his 10 rate rises are working and he doesn’t need to do any more.

The December quarter number was 7.8%, so any number under 7% would be good news for Dr Phil and interest rate worriers. If it remains above 7%, the RBA could easily raise rates again on May 2.

One last thing Dr Phil must be worried about is the mortgage cliff. That’s when over 880,000 borrowers switch from fixed to variable home loans from the middle of this year. And that’s when 10 or 11 rate rises will really hurt household budgets, really KO building and start demolishing jobs.

The RBA Governor has a gamble on his hands: does he need to raise rates again or has he really done enough? The answer to that will probably show up around September when his job will either be renewed or cancelled!

The CPI data this week is big news for a lot of Australians and the Oz economy.