Race to tame inflation more tricky than one that stops the nation

The Melbourne Cup is one of the best and worst places to discuss monetary policy.

At 2.30pm on a spring Tuesday no-one is thinking about of the Reserve Bank boardroom.

Robbie Williams has just walked off-stage to thunderous cheers in the crowd. The bars that opened at 10.30am are busy selling prosecco by the bottle and pre-mixed cans of spirits in a cardboard carry tray that holds four.

Shortly, the favourite will storm home to win the big race.

Everyone is dressed up. It's a festival of discretionary spending.

Yet, conversations with racegoers reveal the breadth of the impact of the decision to lift interest rates.

And how it affects different people in wildly disparate ways.

No house, gone travelling

In a green suit and sharing a bottle with his partner, Anthony said interest rates rising meant they wouldn't be buying a house.

"The cost of living is actually really bad at the moment. We were saving for a house but realised it's almost unattainable," he noted.

Between the squeeze of daily expenses and the dream of home ownership evaporating, they're doing something different.

"So yeah, we've sort of decided to go snowboarding all over the world instead," he declared.

This isn't a daydream: the pair have just returned from Europe and are planning a snowy Australian summer in Japan.

Christine has a mortgage, and had a message for the nine members of the Monetary Policy Board of the Reserve Bank. (Three of whom voted against the decision to lift rates).

"Please, stop. Just stop," she pleaded, joking that she wouldn't be able to attend an event like this if the rates kept rising.

Savers happy, but concerned

Most focus in the interest rate discussion understandably goes to the around one-third of Australians who have housing debt.

Home loans owed to financial institutions are largely on variable rates, meaning the size of repayments increases as the cash rate lifts.

A further one-in-three people rent where they live, with many of those properties subject to a mortgage and renters now at the outer limit of what they can afford to pay.

But for those who have paid off their housing, approximately the final third, deposits and savings are increasing in value.

Higher interest rates mean higher returns on the money they have stored.

Craig is retired and has paid off his house. But he's not gloating.

"I think it's unfair," he lamented.

"Really what you're doing is actually burdening a small number of people when they're holding mortgages. Doing the heavy lifting in terms of taking money out of the economy."

He'd like to see a "a little bit more bravery" from the federal government in using its options to lower inflation.

The government has ways it could lower inflation without lifting interest rates but the options are often slow, hard, politically risky and not always guaranteed to work, at least not without the risk of unintended consequences.

They include things like boosting productivity, intervening in markets, freeze prices, imposing super-profits taxes or temporarily lifting the Medicare levy or the amount employers pay in superannuation for workers in substitution for some part of wage increases.

People 'not having much fun'

NAB chief executive Andrew Irvine told ABC's chief business correspondent Ian Verrender on The Business that 2027 would be a "challenging year" for the bank's customers.

" I think that is an undeniable fact," he said.

"Most of our customers are resilient and they're getting by. They might not be having much fun, but they're getting by."

He's not alone. I stopped a man in a slick suit and told him the result, which had been strongly tipped ahead of time.

"I thought (the cash rate) was going to go up," he told me, after stubbing his cigarette out so it wouldn't be on TV.

"I've got four properties, so it's gonna hit our budget quite hard. It's not something you want to think about when you're out having fun. I think I do need a good result to pay for the extra interest rates, don't I?"

The people I saw at the races were all having fun.

Like the impact of interest rates, the issue was always going to be how they felt the next day.