What could the increase rates this week, as well as in future, where markets are priced in one or maybe two more, do to the housing market? And how worried is the RBI about that?

Look, I'd say that they're not overly worried.

You're right that they said that this is one of the downside risks, as economists always say.

It was interesting, too, that at the Reserve Bank board meeting the other day where they decided to jack up rates, the governor did say that they considered pausing.

And one of the reasons they considered pausing was because of the housing market and the way that prices have fallen so far.

Look, on house prices, it depends what you call a crash.

Certainly a correction.

Was that your reading, Matt? And what does that mean for the political debate? Does it prove the coalition was right or is it not so simple?

Could you just explain to us why did the RBA raise rates to a 15-year high on Tuesday when the economy feels pretty flat?

Well, it is an unusual combination of things going on really, 'cause you're right.

Um, there are a whole lot of economic indicators out there that are kind of contrary to what you'd expect with rates reaching, like, a 15-year high.

So let me go through a few of them, and in fact it's interesting, when I, I went to the Reserve Bank governor's press conference after interest rates were increased on Tuesday, and this is exactly the question I asked.

I said, "Inflation is high, but we've also got unemployment at a five-year high.

We've got house prices falling quite sharply, and growth is pretty anemic, especially if you look at a, on a per capita basis." So they're not really the sort of the conditions you'd expect for a rate hike of this magnitude, because it, I think it has really sent shock waves through the economy, through the community, obviously through politics, because we are at that 15-year high at 4.6%.

So look, the, the short answer is, as the Reserve Bank governor and other officials keep saying, inflation is too high.

What could the increased rates this week as well as in future, and we- markets are priced in one or maybe two more, do to the housing market, and how worried is the RBA about that?

Is it fair?

Well, that's, that's the criticism that some of these ideas are coming from, but my point is that there's always gonna be someone paying the price.

And the idea of these suggestions really is to even up the cost, if you like.

So that's a great objective, but the point I was trying to make is that there's a cost.

You know, if the government decides tomorrow to hike taxes, it would probably have a very big impact on inflation.

It would kill the problem dead, but we'd all be paying a lot more tax, and that would probably have big effects in the economy too.

So the point is there's a price to pay no matter which method you do.

Because you told me before recording, we were chatting about this, and you said, "Well, the Reserve Bank would argue that it's not quite that black and white." So tell us what the Reserve Bank would argue and, and whether there is merit to their argument.

How so? Like, paint a picture of what life could look like.

Well, it's interesting.

It is saying that we're at a, a pretty significant moment.

It's not as though...

I mean, I guess you could've said that every time, because this is the seventh inter- inter- Intergeneration Report that's been put out by the federal government, and there's always big issues.

But it does seem, at least according to this report, that we're at a pretty critical juncture.

The first one is, uh, AI, and it actually points out these four or five issues, like AI is one, and trying to work out what that might mean for Australia into the future.

So overall, I guess help us here, Matt, how should we interpret all of this information, all these predictions? How should we feel about the future, Matt?

Matt, just super briefly, what are the factors? Is it anything unexpected as to why this has fallen so low, or is it essentially what we've always heard about, which is high cost of living, global warming, people worried about, you know, the wars and so forth, you know?

Yeah, I think, I think it's an incredibly complex story, but there's no doubt that costCost of living, cost of raising children is a big factor.

I think housing in Australia, especially in the, our big cities in particular, is a massive issue.

I mean, it's very hard to have more than two kids in a cramped two-bedroom unit in the middle of Sydney, Melbourne, or Brisbane.

In some ways, that limits the decisions that people make in terms of how many children they might like to have because they know that, say they've got two kids and they're considering a third, it might mean they have to, you know, upgrade to a much bigger house, get a new car or whatever, and I think housing is a massive factor.

I did a interview with one young Melbourne woman who has one child, has a single child by choice, and it's ringing in my head that she said there is no right or wrong in family size, and I think that's a really important point to make.

There are so many factors at work.

And just how much is it gonna bottom out?