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<\/p>\nThe Melbourne Cup is one of the best and worst places to discuss monetary policy.<\/p>\n
At 2:30pm on a spring Tuesday no-one is thinking about of the Reserve Bank boardroom.<\/p>\n
Robbie Williams has just walked off-stage to thunderous cheers in the crowd. The bars that opened at 10:30am are busy selling prosecco by the bottle and pre-mixed cans of spirits in a cardboard carry tray that holds four.<\/p>\n
Shortly, the favourite will storm home to win the big race.<\/p>\n
Everyone is dressed up. It’s a festival of discretionary spending.<\/p>\n
Yet, conversations with racegoers reveal the breadth of the impact of the decision to lift interest rates.<\/p>\n
And how it affects different people in wildly disparate ways.<\/p>\n
<\/p>\n
Thousands of punters put their hard-earned money on the line at the Melbourne Cup. (ABC News: Ethan White)<\/p>\n
No house, gone travelling<\/p>\n
In a green suit and sharing a bottle with his partner, Anthony said interest rates rising meant they wouldn’t be buying a house.<\/p>\n
“The cost of living is actually really bad at the moment. We were saving for a house but realised it’s almost unattainable,” he noted.<\/p>\n
Between the squeeze of daily expenses and the dream of home ownership evaporating, they’re doing something different.<\/p>\n
“So yeah, we’ve sort of decided to go snowboarding all over the world instead,” he declared.<\/p>\n
This isn’t a daydream: the pair have just returned from Europe and are planning a snowy Australian summer in Japan.<\/p>\n
Christine has a mortgage, and had a message for the nine members of the Monetary Policy Board of the Reserve Bank. (Three of whom voted against the decision to lift rates).<\/p>\n
“Please, stop. Just stop,” she pleaded, joking that she wouldn’t be able to attend an event like this if the rates kept rising.<\/p>\n
Savers happy, but concerned<\/p>\n
Most focus in the interest rate discussion understandably goes to the around one-third of Australians who have housing debt.<\/p>\n
Australian banks lift rates<\/a><\/p>\n Australia’s banks reveal they will raise their interest rates in response to the RBA’s decision to lift the cash rate for the fifth time in 2026.\u00a0<\/p>\n Home loans owed to financial institutions are largely on variable rates, meaning the size of repayments increases as the cash rate lifts.<\/p>\n A further one in three people rent where they live, with many of those properties subject to a mortgage and renters now at the outer limit of what they can afford to pay.<\/a><\/p>\n But for those who have paid off their housing, approximately the final third, deposits and savings are increasing in value.<\/p>\n Higher interest rates mean higher returns on the money they have stored.<\/p>\n Craig is retired and has paid off his house. But he’s not gloating.<\/p>\n “I think it’s unfair,” he lamented.<\/p>\n “Really what you’re doing is actually burdening a small number of people when they’re holding mortgages. Doing the heavy lifting in terms of taking money out of the economy.”<\/p>\n He’d like to see a “a little bit more bravery” from the federal government in using its options to lower inflation.<\/p>\n The government has ways it could lower inflation without lifting interest rates<\/a> but the options are often slow, hard, politically risky and not always guaranteed to work, at least not without the risk of unintended consequences.<\/p>\n They include things such as boosting productivity, intervening in markets, freezing prices, imposing super-profits taxes or temporarily lifting the Medicare levy or the amount employers pay in superannuation for workers in substitution for some part of wage increases.<\/p>\n Loading…People ‘not having much fun’<\/p>\n NAB chief executive Andrew Irvine told ABC’s chief business correspondent Ian Verrender on The Business<\/a> that 2027 would be a “challenging year” for the bank’s customers.<\/p>\n ” I think that is an undeniable fact,” he said.<\/p>\n “Most of our customers are resilient and they’re getting by. They might not be having much fun, but they’re getting by.”<\/p>\n He’s not alone. I stopped a man in a slick suit and told him the result, which had been strongly tipped ahead of time.<\/p>\n