September 2nd 2024.
Treasurer Jim Chalmers has expressed concern over the impact of interest rate hikes by the Reserve Bank on the economy, stating that it is putting a strain on Australian households who are already struggling with the high cost of living. In an interview with 9News.com.au, Chalmers emphasized the need to address inflation as a top priority.
"This is not a new issue," Chalmers stated. "I have raised this before and it's just a fact that families are feeling the pinch due to these hikes. We can see it in the data." He added that it is vital for the RBA to have the same objective as the federal government, which is to ease the burden of inflation on Australian families.
"We may have different responsibilities, but our end goal is the same - to tackle inflation without further damaging an already fragile economy," Chalmers explained. "We are working closely with the independent Reserve Bank and have made some progress in reducing inflation, which has decreased significantly since we took office."
Chalmers also criticized the opposition party for their alleged desire for higher interest rates, in hopes of political gain. He made these remarks as the country prepares for the release of new GDP figures, which are expected to reveal a slow 0.2% growth in the economy for the June quarter.
"There is a lot of uncertainty on a global level, and coupled with the impact of interest rate hikes, it would not be surprising if the upcoming national accounts show a subdued economy," Chalmers stated. "We had predicted a slow economy during budget time, and it seems that's what we can expect from the latest figures."
The cash rate has remained at 4.35% since November 2023, the highest it has been in 13 years. Chalmers acknowledged the struggle of the federal government in balancing the fight against inflation while also providing relief to the public. "We are facing the challenge of managing inflation while the economy is already being affected by higher interest rates and global instability," he said.
During a parliamentary inquiry last week, the leaders of Australia's top four banks predicted that interest rates would start to decrease. However, RBA Governor Michele Bullock dismissed this as a "premature" hope. The RBA board had announced in August that there would be no change in interest rates, and they do not anticipate a return to the target inflation rate of 2-3% until December 2025.
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