Interest Rate Hikes Spark Woes for Labor, Boost for One Nation

Anthony Albanese's government is facing economic woes after recent interest rate hikes and rising inflation. The Reserve Bank lifted the cash rate to 4.6% on Tuesday, the highest in 15 years, with Governor Michele Bullock warning that more rises are possible due to excess demand in the economy.

The Labor Party has been struggling since the voice referendum defeat, but things have taken a turn for the worse in recent weeks. The Albanese government's polling levels are at some of their worst, and the Coalition is starting to imagine the possibility of winning after one term.

Wednesday's inflation numbers showed headline inflation rose to 4% in the year to August, up from 3.5%, while trimmed mean inflation held steady at 3.6%. The Reserve Bank attributed the increase to excess demand in the economy and global disruption, particularly the war in Iran.

Jim Chalmers, the Treasurer, was challenged over Labor's big spending agenda, which he insists is coming down, but conceded there is more work to be done.

The government faces an increasingly difficult period between now and the election, with changes to negative gearing and capital gains tax cooling the housing market. This means homeowners will have to pay more for their mortgages at the same time as the value of their home drops.