Since Parliament last sat, the likelihood of a rate rise this year has gone from 'not likely' to 'lock it in'. I wish I could say this is because, in the past couple weeks, there has been data showing that the economy is going gangbusters and is in need of cooling off. But alas… this is not the case.
Mon 7 Sep 2026 11.49 AEST
Photo: AAP Image/Susie Dodds
Last week, research by the Reserve Bank of Australia (RBA) confirmed that they were wrong in 2023 to criticise research by The Australia Institute, which showed rising profits were the significant cause of inflation in the post-pandemic period.
The Minerals Council of Australia is advertising that mining companies pay “at least 30 cents of every dollar to government”, rising to as much as 54 cents “once royalties are included”. Except, this is not correct.
Since Parliament last sat, the likelihood of a rate rise this year has gone from ‘not likely’ to ‘lock it in’.
I wish I could say this is because, in the past couple weeks, there has been data showing that the economy is going gangbusters and is in need of cooling off.
But alas…
Last week, we had pretty bad GDP figures – a mere 0.4% growth in the quarter coming off a 0.3% growth in the March quarter. In other words, the economy in the first half of the year, has basically been growing at half speed.
The expectations, though, were for something even worse than that, so apparently that’s why we need a rate rise.
Other things going on are more international and Trump-related.
You’ll be reading a bit about bond yields at the moment. They are the interest rates on government borrowings/debt.
They have increased of late, and it’s not just Australia:
The lazy explanation will be that this is about government borrowing.
Quality research, analysis, explainers and factchecks from experts you can trust.
And, yeah, sort of. But not really.
Firstly, the Iran War is keeping oil prices high and pushing up inflation expectations. So, those looking to lend money want higher interest rates. Why would you lend money at 3% if you think inflation is going to be 3.5%?
And at the same time, US government debt is exploding as defence spending is rising absurdly because of the idiotic Iran War, and also because Trump has decided tax cuts are a good way to raise less money.
So, that is driving the increase in bond yields.
But so too is the investment in data centres.
There has been an explosion in investment in those awful things, and that requires a stonking large amount of money.
That means there is a huge demand for finance. And so, those who have money to lend are able to charge higher interest rates (because there is such a high demand for it).
That leads to higher interest rates for all because if the Australian government wants to borrow money, it needs to offer higher interest rates; otherwise, the money will just go elsewhere (the US and all the AI companies).
This then flows through to our own interest rates.
So, thanks to high oil prices, Trump, and an investment frenzy in data centres, interest rates will probably go up on your mortgage.
Ever get the feeling you’ve been cheated?
