Electricity rebate: Impact on inflation and the Aussie Dollar [Video]

Today I want to talk about this $300 electricity rebate offered by our political leaders. Treasurer Jim Chalmers announced this during the annual Australian budget. It feels reminiscent of past schemes that didn't quite pan out.

He’s suggesting that by giving everyone $300, he can magically reduce electricity prices. Now, I don’t see how that actually lowers electricity costs. What it does is alleviate some pressure on families, which is necessary whether you're poor, rich, or somewhere in between like me.

This rebate changes the amount people can spend in the economy, impacting the inflation rate. We're not just talking about $300 per person; this totals $3.5 billion. All this extra money might actually add pressure to inflation. They claim electricity prices are falling, but in reality, it's just the amount people are paying that decreases. Once that $300 is gone, electricity prices will spike again.

Are they trying to trick the Reserve Bank into a rate cut? When inflation rises again, won't the rates just increase once more? Is this a genuine strategy or a desperate attempt to win votes? To me, this just provides another reason to short the Aussie dollar.

For a detailed technical analysis of the Aussie against the US dollar, yen, pound, and others, tune into our free webinars hosted by our senior market strategist, Duncan Cooper. He’ll walk you through the levels he’s monitoring and answer your questions. You can ask him what he thinks of this electricity rebate and its potential impact on the Aussie dollar.

Personally, I’m confused and perplexed by this approach. It seems like they’re just trying to give away money without addressing the underlying issues. During COVID, they threw money at people, which led to inflation. Now, they're doing it again.

I believe this is a desperate measure by politicians who initially created this inflation problem. So, keep an eye on the Aussie dollar, and consider how these political maneuvers might impact your trading strategies.