How not to win friends in the government

Three rate rises ahead, says ANZ - FederalElection2007News - FederalElection2007

Presumably, Mike Smith of ANZ does not think it likely he needs to have friends in the Howard government, with his prediction not just of a rate rise in November, but two more to come after that.

This is another case of terrible luck for John Howard. As far as I can tell, no one can point to any actual policy of the Howard government that is leading to the current pressure for interest rate increases (matters such as droughts, the US home lending crisis, and house price increases seem to be all that is cited.)

George Megalogenis points out today that nothing Rudd would do as PM has any prospect of affecting interest rates in a downwards direction in the short to medium term, so it's not like people can expect relief on home mortgages by voting Labor.

Howard is still arguing that relaxing IR laws will have an inflationary effect, and therefore interest rates will still be lower under the Coalition. But, of course, Labor will argue that Howard and Costello have already failed their last election "promise", so why believe them now, and that is likely to be the argument that will stick in voter's minds. (After all, it is politically difficult for the Coalition to suddenly push the line too hard that the recent interest rates are really out of its hands.)

Things are not looking good for Coalition recovery...