DAVID KOCH, HOST:
Joining me now Federal Treasurer, Jim Chalmers. Treasurer, good morning. The Reserve Bank Board meets today, making an announcement at about 2:30. Are they doing the right thing by increasing official interest rates?
JIM CHALMERS, TREASURER:
Good morning, Kochie, and to all your viewers. Look, I think the Reserve Bank has been pretty clear that people should brace for another interest rate rise today. My job is not to pre‑empt or second guess decisions taken by the independent Reserve Bank. As you know, they're not decisions of government, they're decisions of the Reserve Bank. So I'm focused on my job, which is to try and manage the economy through a difficult period. That means focusing on where we can have an influence, trying to unclog some of these supply chains and do some of that work so that we can make the job of the Reserve Bank a bit easier.
Okay so is inflation being caused by the supply chain blockages and the weather? Or are we going out as individuals and spending too much and pushing prices up?
Well, it's got a number of sources. I mean, a big part of the story is the global story. Obviously, the pressure on energy and food prices internationally is having a big impact. But there is a supply chain story in our own country too. A lot of viewers who go to the supermarket and maybe the product that they're looking for is not there, there'll be a little ticket that says our supply chains are not working as we want them to. And so people understand that ‑ whether it's labour shortages, shortages of materials, flooding ‑ all of those issues are playing out as well. But there has been relatively strong demand in the economy as well. And that's what the Reserve Bank is focused on ‑ doing their job. My job is to focus on some of those other issues to try and take some of the pressure off this inflation. It'll get a bit worse before it gets better, but it will get better.
Your economic update just the other week had inflation down to five and a half per cent middle of next year, end of next year down to three and a half per cent. So that's getting back to normal. Is that all dependent on the interest rate increases, or will inflation come down whether we increase rates or not?
I think a bit of both, Kochie, is the assumption that the Treasury makes when they put those forecasts together. They factor in these interest rate rises that people are unfortunately having to wear right now, but also factoring in some of those other issues too ‑ whether it be energy prices, food prices globally, and some of those other factors which are pushing up inflation. And so, we do expect it to moderate, start to moderate from the end of this year, still be relatively high for a little while after that, but coming down towards more normal levels. And that's important I think for people to understand ‑ we can weather this storm together, but there will be some heavy weather for the time being. And on the other side of it, our efforts are about building an economy which is stronger after this shock than it was before.
What do you say to the big banks who are whacking up interest rates on loans as quickly as possible but not passing those increase in interest rates to savers. The average saving rate for the big four banks is a piddly .3 per cent. [INAUDIBLE] it averages one and a quarter per cent. Now ING is paying 2.6 per cent. The banks are paying less than half than one of their competitors is doing.
I think it's really disappointing, Kochie, and I'll have an opportunity to relay that myself to the banks through the course of today because I feel like people who are relying on their savings, they've been the principal victims of interest rates at historic lows for some time now. There needs to be a silver lining in these interest rates going up and that's for savers ‑ people who need and deserve better interest rates. And what you've just mentioned in your question, Kochie, I think is bang on ‑ you can get better interest rates on savings on deposits. And so I'd encourage people if you are being let down by your bank, find a better deal if you can.
Treasurer, always good to catch up. Thank you.
And you, Kochie.