September 2nd 2024.
Treasurer Jim Chalmers recently expressed concern over the current state of the economy as the Reserve Bank continues to raise interest rates, causing Australian households to struggle with the cost of living crisis. In an interview with 9News.com.au, Chalmers emphasized the need to address inflation as a top priority.
"This is not a new issue that I'm raising, I've mentioned it before," Chalmers stated. "The uncertainty in the global market and the higher interest rates are putting a strain on household budgets and slowing down the economy, and this is evident in the data."
Chalmers believes that the Reserve Bank should share the same goal as the federal government, which is to provide relief to Australian families who are facing the burden of inflation. "Although we have different responsibilities, our objective remains the same - to tackle inflation without further damaging an already weak economy," Chalmers added. He also criticized the opposition party for their desire to see higher interest rates, believing that they are using the current situation to their political advantage.
The Treasurer's remarks come at a critical time, as new GDP figures are set to be released on Wednesday. It is predicted that these figures will reveal a slow growth rate of only 0.2% in the Australian economy for the June quarter. Chalmers made these comments in response to the growing tension between the RBA and the federal government.
"With all the uncertainty in the global market and the impact of interest rate hikes, it would come as no surprise if the national accounts on Wednesday show a sluggish and subdued growth," Chalmers stated. He also mentioned that the government had anticipated a slow economy during budget time and that this is what most economists are now expecting.
The cash rate has remained at 4.35% since November 2023, making it the highest level in 13 years. Chalmers acknowledged that this is a cause for concern and that the government is working towards providing relief to combat the rising cost of living.
"In an economy that is already struggling with the effects of higher interest rates and global volatility, the government is doing its best to ease the burden on Australian households," Chalmers said.
During a recent parliamentary inquiry, the CEOs of Australia's four major banks predicted that interest rates would begin to stabilize. However, RBA Governor Michele Bullock dismissed this as a "premature" expectation. The RBA board did not raise interest rates in August and does not expect inflation to return to the target range of 2-3% until December 2025.
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