The RBA will be relieved that the government has little intention to give subsidies to Australians from a brighter budget outcome ahead of another cash rate increase.
The Reserve Bank’s inflation fighting agenda has been bolstered by the government’s promise to minimise budget handouts to Australians, ahead of a widely expected ninth consecutive increase to the cash rate on Tuesday.
Dr Oliver said stronger than forecast commodity prices, notably for iron ore, coal, and gas, are the main drivers of the improved fiscal position.He estimates the 2022-23 deficit at around $17 billion, down from the October budget expectation of $36.9 billion. For 2023-24, he projects $35 billion, down from the October budget expectation of $44 billion.
Australian inflationary forces have lagged behind other developed markets because they started from a lower point, particularly wages growth. Moreover, energy prices only rose late last year, while flooding in eastern Australia added pressure to food prices.on Friday showed 23 tipped a ninth straight rate rise at the RBA’s board meeting on Tuesday, with 22 of those pencilling in a 0.25 percentage point rise. That would take the RBA cash rate from a record low 0.1 per cent to 3.
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