Treasurer Jim Chalmers defends government’s inflation work as RBA rate hike expected to reach 15 year high

Treasurer Jim Chalmers has been accused of “gaslighting” Australians as the country braces for yet another rate hike.

He appeared on ABC News Breakfast on Tuesday morning ahead of the Reserve Bank of Australia releasing its decision on interest rates.

While acknowledging that people were under “substantial pressure”, he maintained the Labor government is focused on inflation.

“Obviously, people are already under very substantial pressure, and an interest rate rise would add to the pressure that a lot of Australians are feeling,” Dr Chalmers said.

“From my point of view, from the government’s point of view, we recognise the independence of the Reserve Bank, and we’re focused, on our part, in the fight against inflation, which is to manage the Budget responsibly, provide cost-of-living relief in an ongoing way, and also to deal with some of these longer-term challenges in our economy.”

During his appearance, he blamed inflation rates, in part, on conflict in the Middle East.

UNSW economics professor Richard Holden told ABC radio that Dr Chalmers was sidestepping responsibility for inflation.

“To blame this rate rise or potentially next month’s rate rise on what’s going on in the Middle East is just wrong,” he said.

“That is the Treasurer gaslighting Australians.”

Much of the speculation around the RBA decision indicates there will be a rate hike for the fourth time this year when its two-day board meeting finishes up on Tuesday.

It would put interest rates at a 15 year high.

“It is the case that, when interest rates go up, it does put extra pressure on people, just as it puts extra pressure on people when the unemployment rate ticks up as well,” Dr Chalmers said.

He said it was possible to keep unemployment rates low while achieving “lower and more steady inflation”.

“That’s the Reserve Bank’s objective, and it’s the government’s objective too,” he said.

Professor Holden suggested Dr Chalmers “get spending under control” in attempt to lower inflation.

“The reality is, on this government’s watch, spending as a share of GDP has gone up by nearly 2.5 percentage points off a basis of 24 to 25 per cent,” he said.

“There’s been a massive increase in spending on the Treasurer’s watch.

“If he wants to help the RBA do the job, get prices more affordable for Australians and deal with our cost of living crisis, he needs to get the budget under control.”