Trump looms larger than the budget in the RBA's rate outlook
The RBA will hand down a rate decision on 1 April. The board will need to think about the federal budget and the deteriorating global environment.
Michele Bullock will undoubtedly be asked about the implications of the Albanese government’s budget on the economy and inflation when she fronts the media at her post-meeting press conference on Tuesday.
Any rate movement from the Reserve Bank board next week is unlikely to have been swayed by the federal budget. Instead, economists say the focus is squarely on the impact of the Trump administration’s policy decisions, rather than Labor’s new tax cuts and energy bill relief.
The federal budget, handed down on Tuesday night, contained few surprises. One notable measure was approximately $17 billion in tax cuts, reducing the lowest income tax threshold by 2 percentage points over two years. This is expected to return $268 a year to individuals earning more than $45,000 in 2026–27, increasing to $436 in 2027–28.
The government described the tax cuts on the night as “modest” and part of a broader suite of support to assist with cost of living pressures, including the extension of the energy bill rebate for six months worth $150 per household and small business. Chalmers explicitly told journalists in the lock-up that the design of the tax cuts, both their size and the staggering over two years, was in part due to the government's mindfulness about inflation.
