Australia’s interest rate obsession is stopping us having an important discussion about our economic future

‘It’s hard to focus on the country’s challenges when our personal challenges seem so great. But we must confront them if we want things to change.’ Photograph: Rick Rycroft/AP

Australia has one of the highest levels of household debt among developed economies. Indeed, our collective household debt is greater than the size of our entire economy – at an eye-watering 112%, or more than double the European average. Most of that’s in our mortgages, with average home loan debt of nearly $670,000, but more than half of Australians also borrow on credit cards, and about one in eight of us take out personal and/or car loans.

So it’s no surprise that millions of Australians breathed a sigh of relief as the Reserve Bank of Australia cut interest rates on Tuesday for the third time since February this year, albeit only by a quarter of a percentage point. While financial markets and most economists expected this latest cut as inflation continued to improve, the July decision not to move on rates still had many biting their nails.