Investment returns will be weaker this decade: Costello

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More rate rises and an unemployment rate above 4 per cent will be needed to tame inflation, Peter Costello told the the AFR Business Summit on Tuesday.

Economist Nouriel Roubini said financial markets were not pricing short-term interest rates correctly, including in Australia, where he said inflation was clearly more persistent than the RBA had expected.

Underinvestment in the \energy sector meant that even a moderate increase in demand would translate into higher commodity prices and higher inflation, he said.With the budget under pressure from a $50 billion annual structural deficit, Australian Institute of International Affairs incoming national president Heather Smith said the federal government would be faced with trade-offs around national security, economic prosperity and social cohesion.

Mr Costello said doing business in Australia was getting more expensive due to deglobalisation and the energy transition. “But undoubtedly, I think we would be looking at unemployment rising. And let’s be honest, that’s part of why interest rates are going up. Because we’ve probably learned that we can’t support a non-inflationary unemployment rate below 4 per cent.”BHP chief executive Mike Henry said Australia had to remain competitive to attract overseas capital to build new industries that can offset expected declines in other ones.

 

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What. So not only is the government going to send families to the wall with rising interest rates but people's jobs are going to be sacrificed to 'tame inflation'. Yet Coles & Woolworths increase prices at will & unchecked making billions in profits. RBAInfo JEChalmers AlboMP

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