September 2nd 2024.
Treasurer Jim Chalmers expressed his concern about the current state of the Australian economy, stating that the Reserve Bank's interest rate hikes are causing significant strain on households. In an interview with 9News.com.au, Chalmers emphasized that it is crucial to address the rising cost of living, which has become a top priority for both the government and the RBA.
Chalmers reiterated that this is not a new issue, as he has previously raised concerns about the impact of global uncertainty and increasing interest rates on household budgets and the overall economy. He believes that the RBA and the federal government should have the same objective of easing the burden of inflation on Australian families.
"We have different roles, but our goal is the same – to tackle inflation without further damaging an already fragile economy," Chalmers stated. He also criticized the Liberal and National parties for their apparent desire for higher interest rates, which they believe will benefit them politically.
This discussion comes amid the release of new GDP figures on Wednesday, which are expected to show a slow growth rate of only 0.2% in the June quarter. Chalmers believes that this is a result of the global uncertainty and the impact of interest rate hikes on the economy. He noted that this was anticipated during budget time and is now being confirmed by most economists.
Since November 2023, the cash rate has remained at 4.35%, the highest it has been in 13 years. Chalmers acknowledged that this is a cause for concern and that the government is working towards providing relief for the cost of living while also combating inflation.
During a recent parliamentary inquiry, the heads of Australia's four major banks predicted that interest rates would start to decrease. However, RBA Governor Michele Bullock dismissed this as a "premature" hope and stated that they do not expect inflation to return to the target range until December 2025.
In conclusion, Treasurer Jim Chalmers expressed his frustration with the current state of the economy, emphasizing the need for both the RBA and the government to work towards easing the burden of inflation on Australian families without further damaging the economy. He also highlighted the impact of global uncertainty and rising interest rates on the slow growth rate, which is expected to be reflected in the upcoming GDP figures.
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