Jim Chalmers talks up ‘welcome’ news in latest RBA interest rate decision

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Jim Chalmers talks up ‘welcome’ news in latest RBA interest rate decision

Treasurer Jim Chalmers says Australia has made “substantial progress” in the fight against inflation after the Reserve Bank opted to keep interest rates steady at a 12-year high on Tuesday.

The cash rate remains at 4.35 per cent, unchanged since last November, with the RBA noting that while inflation was lower than its 2022 peak, it was proving difficult to return it to the bank’s two-to-three per cent target.

The RBA forecasts that now won’t happen until 2026, but in its statement reiterated that “sustainably returning inflation to target within a reasonable timeframe reflects the Board’s highest priority”.

With chances of a pre-election rate cut dissipating, Mr Chalmers said the Government had been helping in the fight and shared the same goal as the bank.

“And when it comes to the Reserve Bank and the Government, we have the same objective when it comes to getting on top of inflation without ignoring the risks to growth in our economy,” Mr Chalmers said.

“Now, the fact that interest rates haven’t gone up for the best part of the year, I think is an indication that we have been making welcome and encouraging progress in the fight against inflation. It’s still higher than we’d like, but it is definitely trending downwards.”

Mr Chalmers said he wouldn’t “second guess” the decision and defended the independence of the Reserve Bank, as the Greens used the latest decision to double down in their calls for the Government to override the RBA.

The Greens have threatened to keep Labor’s RBA reforms — which have been rejected by the Coalition — hostage unless the bank lowers rates, or the Government intervenes.

Greens senator Nick McKim said Mr Chalmers should “finally use powers available to him to bring rates down”.

“Dr Chalmers has the power to bring relief to those who badly need it — he just needs to show some courage,” he said.

“Labor is watching the Reserve Bank drive people to the wall and doing nothing.”

In response, Mr Chalmers said the Greens and the Coalition were “indistinguishable when it comes to economic irresponsibility.”

“It’s been clear from the beginning that there is a risk that the parties to the left and right of us will play politics with the Reserve Bank. We don’t intend to do that,” he said.

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