16 May 2008

Many analysts have praised the new 2008 Rudd Government Budget for its spending cuts in an amiable move to stop the rising problem of inflation, however will it be enough?

The aim to put downward pressure on the inflation crisis has seen slashes to high income earner benefits, with the media responses generally positive towards the Budget’s target. However there has also been speculation about how far the budget can go in entirely tackling the monstrous inflation, “the Reserve Bank of Australia is not out of the woods yet” warned Bank economist Riki Polygenis.

Indeed, if Inflation remains high, the Reserve Bank will have no choice but to further increase interest rates. “This is a precarious state for those only just managing mortgage repayments, and if a thirteenth rate rise occurs, even more people will fall into the debt spiral” says Chris Riotto, Managing Director of the Australian Lending Centre.

The statistics for Australians loosing their homes due to debt are 50,000 per year, so many are still cautious about whether inflation can be pushed down enough in the new budget to assuage mortgage stress.

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