Press conference, Sydney

JIM CHALMERS:

This afternoon the independent Reserve Bank has increased interest rates by 25 basis points to 4.35 per cent. This will make life harder for people who are already doing it tough. Inflation has moderated in our economy since those peaks that we saw last year and our economy has slowed but inflation is still a feature of our economy and inflation has been persistent in recent months, as the Reserve Bank has identified. The primary driver of inflation in the most recent data was petrol but there are other inflationary pressures in our economy as well and the Reserve Bank is responding to that. As I said, they take these decisions independently, they can explain those decisions and I refer you to the statement for the explanation of what's happened today.

We all want inflation to moderate further and faster. We have the same goals as the independent Reserve Bank but we have different jobs. The Reserve Bank's job is to address this inflationary challenge without crunching the economy. I'm focused on my job which is a distinct but complementary job when it comes to fighting inflation. We are doing our bit as a government when it comes to addressing this inflation challenge: rolling out cost-of-living relief in a way that puts downward pressure on inflation rather than add to our inflation challenge. We've got the Budget in much better nick in recent times when inflation was most acute – the first surplus in 15 years is part of that effort. And we're investing in energy and skills and housing as well. So across those three areas – cost-of-living relief, getting the Budget in better nick, investing in energy and skills and housing – we are helping to put downward pressure on inflation. There are at least three ways that we know that this is the case. First of all, the Bureau of Statistics said that our policies took something like half a percentage point off inflation in the most recent figures. The Reserve Bank Governor has said that our fiscal strategy is quote "very helpful", "very positive", it's "good", and that it's "enough". And the International Monetary Fund says that we are helping rather than hampering this fight against inflation by ensuring that fiscal and monetary policy are working together.

This is a difficult day for people with a mortgage. We do understand that Australians are already under substantial pressure in their household budgets and this will tighten the screws further, that's why the highest priority of the Albanese Labor government is rolling out this cost-of-living relief which the ABS says is working but also this responsible economic management which the Reserve Bank Governor, the IMF and others have acknowledged as well. The government is doing its bit to address the inflationary pressures in our economy. The independent Reserve Bank has taken this decision today in the interest of this fight against inflation and what we are doing as a government and what the Reserve Bank is doing as an independent board is all about trying to make sure that we can get on top of this inflation challenge in our economy which is hurting our people and our economy more broadly.

JOURNALIST:

Treasurer, did your comments about inflation back the RBA into a corner where it thought it had to raise rates or lose credibility?

CHALMERS:

Of course not. I reject that completely and I've spoken at some length about this including as recently as Sunday. It is entirely appropriate for the Treasurer of this country to talk about the Treasury's forecasts and expectation for inflation, especially on the day that inflation figures come out and so I don't agree with the characterisation at the core of your question. It's appropriate for treasurers to talk about the Treasury's inflation expectations. I also said at the time and I'm prepared to repeat now, of course, it's the job of the independent Reserve Bank to come to their conclusions when it comes to their own expectations for inflation.

JOURNALIST:

Treasurer, I just wanted to ask – does Treasury need to recalibrate its forecasts on inflation given that you've said it's probably more sticky than before?

CHALMERS:

We'll update our forecasts in the usual way in the mid-year Budget update between now and Christmas. The Treasury will go about that in the usual way. In a speech last week, I said that Treasury had already changed some of their expectations for inflation in the near‑term because of this volatility we've seen in fuel prices and in other areas, but their expectations for when inflation will come back to the target band have not materially changed after those inflation figures that were released a couple of weeks ago and so I've made that clear. The Treasury will update their forecasts in the usual way. None of the advice that I've received suggests that they've changed their view about when inflation comes back to the target band which goes to the question I was asked a moment ago, but there has been more near‑term volatility, the biggest driver of that is in petrol prices and that's because of decisions taken by oil producing countries on the other side of the world to wind back on supply. We've seen some wild fluctuations in different markets around Australia. We're not currently working up any proposals on fuel excise. We are focused on rolling out $23 billion of cost-of-living help, which is designed to take some of the sting out of these inflationary pressures. And again if you look at the ABS data that they released not that long ago, it says that instead of childcare costs, for example, going up, they came down. We took some of the edge off increases in rents. We took a substantial amount of the sting out of the increases in electricity price rises. That's not the government saying that, that's the Bureau of Stats saying that. Our efforts to ease the cost-of-living pressures have taken some of the edge off this inflation, about half a percentage point in their estimation. And that shows that we have the right strategy to provide the right kind of help and the right responsible economic management which is helping rather than hampering this fight against inflation.

JOURNALIST:

To the cost-of-living measures you just mentioned, what else is the government going to do to help households?

CHALMERS:

Our focus is on rolling out tens of billions of dollars in cost-of-living relief, which we've already budgeted for. And I noticed in one of the newspapers today, they were talking about people wanting to take some of the edge off electricity bills – that's precisely what we're doing and some of that relief is rolling out this month – November of 2023. So our focus is on rolling out this cost-of-living relief. Obviously, from Budget to Budget we consider whether any additional assistance is necessary, and we weigh that up against the fiscal pressures and the pressures in the economy and come to the right decision. Whether it's the Reserve Bank Governor, the IMF or the Bureau to Statistics. They have come to the view that our responsible economic management and the way that we're rolling out this cost-of-living relief remains appropriate. Thanks very much, everyone.