Depending on how you look at it, Australia woke up this morning to the first Ashes Test win or the announcement of Taylor Swift’s tour schedule. As a music fan and confessed Swiftie, I’m obviously all for the latter. However, as a former financial journalist who has written about how household spending has hit speed bumps, I think Taylor Swift’s upcoming visit raises some interesting questions about Swiftonomics.
Swift’s upcoming five concerts in Sydney and Melbourne are expected to generate between $10 and $20 million in ticket and merchandise sales. That’s a lot of money, especially considering how many people will likely travel from regional areas to the shows and spend more on city accommodation.
The concert’s economic impact is even more significant when considering ticket resellers and merch sales. And while that’s great for Swift, it’s not good for local economies, according to one expert.
“When the tour comes to town, it’s like the Super Bowl or other large event that vacuums up all the local dollars,” said economist Klaus Baader in an interview with CNBC Make It. He added that even if local people don’t attend the concerts, they’ll have less to spend at the Worcester Public Market or the Hanover, and they might also be hesitant to visit other nearby towns for fear of missing out on the Taylor Swift experience.
Some have argued that the concert’s effects on consumer prices, similar to when Beyonce visited Stockholm, may be spurring inflation. But Filip Andersson, an economist at Danske Bank, told CNBC that the inflated prices will be short-lived and shouldn’t affect interest rates.
In a post-rates meeting press conference, Reserve Bank of Australia (RBA) Governor Michele Bullock was asked about the effect on consumers. She responded that the? Taylor Swift inflation? Has forced some spending adjustments, including her own children’s music lessons. But she played down the policy impact as the pop singer prepares to arrive in the country.
Bullock reiterated that the RBA is on track to achieve a soft landing for inflation, below its 2-3 percent target band. She also confirmed that it remains on course to raise interest rates when required but emphasized that a rate move is unlikely before 2023.
The RBA is Australia’s central bank, responsible for issuing the country’s currency and regulating the economy through its banking system. Its statutory functions stipulate it applies monetary policy to ensure economic stability and sustainable growth. It comprises a Reserve Bank Board and a Payments System Board. Its governor is ex officio, and the Australian government appoints its members. The RBA operates Australia’s high-value payments system and sets payment system policy. Its monetary policy decisions are guided by keeping inflation low and stable. The bank also manages the supply of money to the economy. Its key interest rate is the cash rate, the central bank’s primary tool for achieving that goal.