Today I want to talk about the $300 electricity rebate offered by our political leaders. Treasurer Jim Chalmers made the announcement during the annual Australian Budget. It’s reminiscent of previous schemes that didn’t quite work out.
He suggests that by giving everyone $300, he can magically lower electricity prices. Now, I don’t see how this can reduce electricity costs. What it does do is take some of the pressure off families, which is essential whether you are poor, rich or somewhere in between like me.
This discount changes the amount people can spend in the economy, which affects the inflation rate. We’re not just talking about $300 per person; That total is $3.5 billion. All this extra money may actually add pressure on inflation. They claim that electricity prices are falling, but in reality, it is only the amount people pay that is falling. Once the $300 runs out, electricity prices will rise again.
Are they trying to trick the Reserve Bank into cutting interest rates? When inflation rises again, won’t interest rates rise again? Is this a real strategy or a desperate attempt to gain votes? To me, this provides another reason to sell the Australian dollar.
For detailed technical analysis of the Australian Dollar against the US Dollar, Yen, British Pound and more, follow our free webinars hosted by our Chief Market Strategist, Duncan Cooper. He will guide you through the levels he observes and answer your questions. You can ask him what he thinks about this electricity discount and its potential impact on the Australian dollar.
Personally, I’m confused by this approach. It seems like they are just trying to donate money without addressing the underlying issues. During Covid, they threw money at people, which led to inflation. Now, they’re doing it again.
I believe this is a desperate measure on the part of the politicians who created this inflation problem to begin with. So, keep an eye on the Australian dollar, and consider how these political maneuverings will impact your trading strategies.
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