There's another way to fight inflation. So why isn't Australia using it?
News Source
•Sun, 9 Aug 2026 19:32:44 +0000
📰 What Happened
Some economists say Australia could fight inflation by raising compulsory superannuation savings instead of interest rates. This would cool spending but leave the money in workers’ own retirement accounts, rather than sending more to the bank. It is an idea that almost nobody talks about.
The Reserve Bank is due to announce its next decision on Tuesday. Most experts expect the cash rate to stay the same as inflation eases. The central bank wants to bring inflation back to its 2 to 3 per cent target, and higher interest rates are the usual tool, even though they make mortgages and debt more expensive.
🔍 The Backstory
The Reserve Bank sets the cash rate to control inflation, which is the rate of rising prices for everyday goods. When it raises rates, borrowing becomes more expensive and people spend less, which helps cool prices down. But this also hurts people with mortgages.
Another way to slow spending is to make people save more, such as through their superannuation, Australia’s compulsory retirement savings system. Economists who support this say it builds workers’ savings while still easing inflation, giving families a better outcome than simply paying more to the bank.
🎯 Why It Matters
Interest rate changes directly hit how much Australians pay on mortgages and how much they can save. Understanding other tools to fight inflation matters to every family’s budget, and to the retirement money that will one day belong to you.
Some economists say Australia could fight inflation by raising compulsory superannuation savings instead of interest rates. This would cool spending but leave the money in workers’ own retirement accounts, rather than sending more to the bank. It is an idea that almost nobody talks about.
The Reserve Bank is due to announce its next decision on Tuesday. Most experts expect the cash rate to stay the same as inflation eases. The central bank wants to bring inflation back to its 2 to 3 per cent target, and higher interest rates are the usual tool, even though they make mortgages and debt more expensive.
The Reserve Bank sets the cash rate to control inflation, which is the rate of rising prices for everyday goods. When it raises rates, borrowing becomes more expensive and people spend less, which helps cool prices down. But this also hurts people with mortgages.
Another way to slow spending is to make people save more, such as through their superannuation, Australia’s compulsory retirement savings system. Economists who support this say it builds workers’ savings while still easing inflation, giving families a better outcome than simply paying more to the bank.
Interest rate changes directly hit how much Australians pay on mortgages and how much they can save. Understanding other tools to fight inflation matters to every family’s budget, and to the retirement money that will one day belong to you.