Roughly a third of all households own their home and are mortgage free. This is heavily skewed to people over 60, and they have an average net worth of $2m. The highest of any demographic.

Today's rate rise represents an *increase* in household income to this group, barring any interest rate related impact to asset prices (which despite this hiking cycle remain at record levels).

As a cohort, these households also tend to direct more of their income to discretionary ends.

When the RBA says it needs to enact some tough love to reduce demand, that burden largely misses the cohort that has the most wealth and highest discretionary spending.

Not making a judgement, but given that effectively ALL interest rate coverage is framed in terms of how it impacts mortagees, it's worth pointing out.

On another note, for anyone worried about further hikes, id wager a decent sum of money that we're unlikely to see too many more. There's just too much debt in the system.

Data from Roy Morgan shows were already on the edge of a so-called "mortgage stress cliff". About 9% of borrowers, or 300,000 people, said they will likely default if rates go up once or twice more from early 2026 levels. Something like 29% of mortgage holders are now considered at risk of mortgage stress. It's not a small proportion.

Again, to be clear, not making any predictions. Just saying that if the RBA decided it had to kill inflation by significantly increasing rates from here, they would almost certainly crater the economy.

My base case remains higher for longer inflation. If not stagflation to some degree. Not that any of this changes my investment stance, and macro musing are almost always laughable in hindsight. But it's a fun topic to pontificate on.

AFR:

What was said: “Inflation picked up materially in the second half of 2025, and information since the beginning of this year confirms that some of this increase reflected greater capacity pressures.”

“There are early signs that many firms experiencing cost pressures are looking to increase prices of their goods and services. Short-term measures of inflation expectations have also risen.”

“There are materially heightened uncertainties about the outlook for domestic economic activity and inflation. With the conflict in the Middle East continuing, there are plausible scenarios where inflation is higher and activity lower than envisaged under the baseline forecast.”

“Higher fuel prices are adding to inflation and there are indications that this is likely to have second-round effects on prices for goods and services more broadly. This inflation impulse is in addition to the high inflation recorded around the start of 2026, reflecting capacity pressures in the economy.”