Australian treasurer anticipates progress in combating inflation

Australian Treasurer Jim Chalmers said he's hopeful the next data on hand will show encouraging progress in the fight against inflation but is less certain whether or not the central bank would be ready to cut interest rates this week, according to a report by a Bloomberg.

Inflation will slow to 2.7 per cent in August from a year earlier, according to the median estimate of economists ahead of the Wednesday data release.

“Whether it’s in the low threes or in the high twos, what it will show is that inflation in monthly terms is around half what we inherited a couple of years ago when we came to office,” Chalmers told Sky News Australia Sunday. “That would be welcome and encouraging progress. We are broadly on the right path.”

Add WION as a Preferred Source

All 31 economists surveyed by Bloomberg predict the cash rate target will be kept at 4.35 per cent. Earlier this month, Governor Michele Bullock said the policy needs to stay "sufficiently restrictive" until CPI moves sustainably toward its 2-3 per cent target.

Independent decisions are taken by the central bank keeping a wide spectrum of factors in view, Chalmers said.

“The quarterly inflation number is usually the one they focus on a bit more substantially than the more volatile and more unpredictable monthly number,” he said. “They look at the unemployment figures. They look at broader growth in the economy and some of the other data around consumption. And they’ll weigh all of that up.”

Chalmers said the government's action is to slow inflation with consecutive budget surpluses. He added that the confirmed budget balance for the year 2023-24 is likely to be announced on Sept. 30 and reiterated it will show a surplus much larger than A$9 billion ($6.1 billion) announced in May.

“That’s because of our spending restraint and our responsible economic management,” he said. “The Reserve Bank governor has said that those two surpluses that we’ve now delivered are helping in that fight against inflation.”