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Melbourne Cup Day - Winners and Losers



Winners: Michelle, Nicole, Amy, Dianne and Paul

Michelle, Nicole, Amy, Dianne, and Paul are our office prize winners for their choice of unique and stylish outfits that they wore the Melbourne Cup lunch.


Loser: RBA (Reserve Bank of Australia)

Yesterday’s decision by the RBA to lift interest rates aims at reducing inflation, particularly the inflation driven by increased demand. However, as Anneke Thompson, the Chief Economist at CreditorWatch, points out that raising interest rates may have limited impact on reducing price rises in critical areas such as the reduced supply of automotive fuel, rents, and utilities. In essence, while the move is intended to curb inflation, its effectiveness in addressing specific cost-of-living pressures remains uncertain.


Winner: Government Fiscal Policy

If they continue with their precedents, the government can use the rate hike as another opportunity to score brownie points by giving more “cost-of-living relief” payments. Unfortunately, an implication of these payments are that they are expected to increase inflation (that is, the RBA is taking money out borrowers pockets and the Government is putting it back in).


Loser: Borrowers

For those who rely on borrowing money, the increased official cash rate means the cost of borrowing is on the rise. This development could affect both homeowners and businesses seeking to borrow funds for investments. Higher interest rates may lead to more significant financial burdens on those with existing loans and may deter potential borrowers.


Winner: Savers

The rise in interest rates may result in increased income on funds held in savings accounts, term deposits, and other interest-bearing assets. This could be a welcome change for many who have been "underpaid" interest during the last few years.


Losers: Hangover Sufferers

The celebrations of Melbourne Cup Day often includes enjoying a few drinks, but for some, this merriment can lead to the not-so-festive experience of a hangover. For those dealing with the consequences of overindulgence, the morning after the celebrations may be a bit less joyful.


One name stands out as the biggest winner of the day: Mark Zahra.

He repeated his victory from last year, showcasing exceptional skills in horse racing. Congratulations to Mark Zahra and his team for a well-run race!


Reference:


For insights into the potential shortcomings of monetary policy, you can refer to the article by Graham Hand on Morningstar: ["The Shortcomings of Monetary Policy"](https://www.morningstar.com.au/insights/personal-finance/235331/the-shortcomings-of-monetary-policy).


For more information on the RBA's rate rise and its effects, you can refer to the article on CreditorWatch: ["RBA Wrestles Inflation with Another Rate Rise - But Is It Enough?"](https://creditorwatch.com.au/blog/rba-wrestles-inflation-with-another-rate-rise-but-is-it-enough/).










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