The prime minister has moved to freeze the deeming rate for almost 900,000 social security recipients in the wake of the Reserve Bank raising interest rates for the first time in more than a decade.
The rates used to determine income from financial assets will be frozen for the next two years, in an attempt to ensure payments for aged pensioners and other recipients won’t be reduced.
The deeming rate freeze is expected to apply to 885,000 people, with the lower deeming rate set to remain at 0.25 per cent, while the upper deeming rate will stay at 2.25 per cent.
It comes as the Reserve Bank moved to raise the official interest rate from the historic low of 0.1 per cent to 0.35 per cent, the first time the cash rate has been increased since 2010.
The prime minister has expressed sympathy with mortgage holders, who are facing increased rates as a result.
Meanwhile the opposition has pounced on the rate rise, with Labor leader Anthony Albanese saying the decision would make it harder for millions of Australians to make ends meet.
Mr Morrison said the freeze of the deeming rates for social security payments would ensure people could deal with rising costs.
“This is another shield to help protect Australians from the cost of living pressures people could feel from an increase in interest rates,” he said.
“We will guarantee the rate of income for people who could otherwise see their social security income drop because of the increase in interest rates.”
However, Reserve Bank governor Philip Lowe warned there could be further rate hikes on the way in coming months.
“It’s not unreasonable to expect the normalisation of interest rates over the period could see them rise to 2.5 per cent,” he said.
“How fast we will get there will be determined by events.”
The prime minister will start campaigning in Melbourne on Wednesday while the opposition leader will begin in Sydney.
Economic management will be firmly in the spotlight during a treasury debate on Wednesday.
Treasurer Josh Frydenberg will square off against Shadow Treasurer Jim Chalmers at the National Press Club.
© AAP 2022
