Treasurer Jim Chalmers is downplaying any difference between his view of the economy and that of Reserve Bank governor Michele Bullock after the RBA sounded a pessimistic note on inflation.
Treasurer Jim Chalmers says he is "more or less" on the same page as the RBA governor about inflation after the RBA forecast higher inflation for the rest of the year.
While Ms Bullock maintained her practice of not "ruling in our out" interest rate moves in either direction, she confirmed the Board's deliberations focused on whether there should be a rate rise. There now appears to be no prospect of a rate cut until at least next year. And he has ruled out a "slash and burn" approach to spending in next week's budget, saying the government would continue its preferred "inflation-fighting" strategy of subsidies to reduce individual prices, as it has done for energy and child care.
The comments suggested the government would continue the strategy of its first two budgets, where it saved extra tax "windfalls" it has enjoyed thanks to strong commodity prices and strong employment but at the same time added to the economy with its own spending decisions.On Wednesday, Mr Chalmers denied this put him on a different page to the RBA, saying he had "more or less" the same view of economic conditions as Ms Bullock.
"The budget will have a primary focus on inflation in the near term … help for people with the cost of living but we'll make sure that cost of living help is part of the solution and not part of the problem."Economist Chris Richardson said the government should "be careful" with extra spending, even spending aimed at subsidising specific prices."The right thing for the government to do fight the cost-of-living crisis by cutting its spending and/or raising its taxes.
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