If Treasurer Jim Chalmers When asked recently whether Australians should really spend the extra money that will flow into their accounts from Monday, he offered no instructions.
“Oh, look, I’m not giving people advice on their household budget,” Chalmers said at a press event in Sydney. Instead, he reiterated that his aim was to provide “substantial, meaningful and responsible cost of living relief.”
Chalmers is convinced that government support will not make the situation worse. Reserve BankThe challenge of getting inflation back into the 2-3 per cent target range is that Treasury modelling shows inflation will fall as energy costs are reduced (although the RBA is keeping an eye on underlying inflation) and that the Stage 3 tax cuts have long been factored into the forecasts.
But not all economists agree that the impact is neutral. And this dispute is particularly critical right now, as the RBA faces one of its most difficult interest rate decisions since inflation began rising in 2022.
After five months without a change in the key interest rate, a cut was expected this year or early next year. But after the sharp rise in inflation in May, concerns about a necessary rate hike are high again for the upcoming meeting in August.
