Chalmers warns global economy is a ‘dangerous place’
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The news: Treasurer Jim Chalmers told the ABC on Monday that while Australia is well-placed and prepared to respond to the economic volatility currently facing the globe, the country is not immune from it.
The context: Chalmers said that the best defence against global economic volatility is through a stronger Australian economy and budget, and that the government is focused on boosting productivity, budget sustainability and economic resilience.
“The global economy is a pretty dangerous place right now. Australia is well-placed and well-prepared to deal with all of this uncertainty and volatility, but we won't be immune from it," Chalmers said in conversation with the ABC.
Flagging the surge in oil prices since Israel and Iran began strikes on Friday, Chalmers said that money markets are now increasing their bets on interest rate cuts. He added that the unrest is having “substantial economic consequences” and that higher commodity prices and volatility poses a risk to the inflation outlook.
“Now this obviously poses two kinds of risks — higher oil prices do pose a risk to the inflation outlook but they also pose a risk to global growth.”
The Reserve Bank of Australia is next due to meet on 7-8 July, with traders implying a near-90% chance of a third quarter-percentage point reduction to push the cash rate to 3.6%.
The Treasurer is set to speak at the National Press Club on Wednesday this week on Labor’s second term economic agenda.
