ANALYSIS: Chalmers paints a picture of a bleak economic future, but it was just a warm-up
The bank talks in aggregates when it announces increases, emphasising the buffer that exists to absorb rate rises.After Wednesday's release of the 6.1 per cent inflation figure , he told a news conference: "A lot of people are living pay cheque to pay cheque for whom this inflation will be devastating because it's getting harder and harder for them to substitute things out of their household budgets.
And on Thursday he said: "There's no point pretending these rate rises don't hurt – they do and they will." Outlining the latest economic projections , Chalmers said Australia's growth forecast for this financial year has been reduced from 3.5 to 3 per cent. For 2023-24, the forecast is down from 2.5 to 2 per cent.
Inflation is now expected to peak at 7.75 per cent in the year to December. It will still be at 5.5 per cent by mid next year, on the new estimates.If the Morrison government had been re-elected, it would be facing the same difficult outlook. The major drivers of the economic bad news are coming from abroad, especially the war in Ukraine and China's COVID lockdowns. But there are some domestic factors too, such as pent-up demand for spending post-lockdown.
First, Chalmers makes much of saying he wants to level with the public about how tough things are. He talks about taking the Australian people into his confidence, and uses the word "confronting" a lot when describing the economic situation.
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