Michele Bullock is confident Jim Chalmers is serious about inflation. Rate watchers are less certain.
The Reserve Bank has decided to stand still. But it's conscious the federal government is about to hand down its budget.
Michele Bullock and Jim Chalmers have been discussing what the 2024 budget might mean for inflation. The Reserve Bank governor was willing to share this morsel of a detail in the central bank’s post-monetary policy press conference on Tuesday afternoon.
“I’m conscious that there are budgets coming up,” Bullock said, when asked about the potential impact of federal and state spending on the inflation outlook.
“The Federal Treasurer says publicly, and he says to me in private, that he does have inflation in mind while he is thinking about the budget,” Bullock said, adding that budgets are “balancing acts” for governments.
It’s unclear how aware she is of what extra initiatives might appear in next week’s budget. The government previously sought the RBA’s opinion directly about the impact on inflation of amending the upcoming stage 3 tax cuts — a change that does not alter the quantity of money being given back to taxpayers, just the composition of who receives it. At that time, the inflation trajectory was starting to look more favourable.
