Kieran Gilbert:
Let’s get some more reaction to that inflation number. Joining me is the Treasurer, Jim Chalmers. Treasurer, thanks for your time. The RBA shocked everyone at its last meeting. The governor said she wanted to see this number. Surely this will be enough to reassure them that inflation is tracking as they hoped.
Jim Chalmers:
Today’s inflation numbers are outstanding. There’s no 2 ways about it. They are a powerful demonstration of the progress that Australians have made together in the fight against inflation.
Whether it’s headline or underlying inflation, quarterly or monthly, goods and services – what we’re talking about here is the lowest inflation for years.
So, these are very, very welcome developments.
I’m not going to make predictions about the ways that the Reserve Bank Governor and her board will come at this new data today. She’s already made it clear that she considers more rate relief to be a matter of timing, not direction. No doubt they’ll weigh up this very encouraging news that we’ve got today.
Gilbert:
I know you’re always reticent about speculating, but the market is certainly already pricing in – at a much greater percentage – a rate cut at the next meeting. I think there’ll be many mortgage holders hoping, Treasurer, that they might go for a 50‑basis point reduction.
Chalmers:
Again, the market had a very firm expectation the last time the Reserve Bank Board met. And what that told us is that market expectations don’t always accord with the decisions taken independently by the Reserve Bank Board. I think that’s an important reminder as we see that the market once again has got very firm expectations about the next meeting.
There’s very good reasons why our Reserve Bank is independent. Good reasons why Treasurers like me don’t predict or pre‑empt the decisions that they take independently around that boardroom table in Sydney.
My job is to focus on the responsibilities that we share to get inflation down. These are pretty stunning numbers when you consider when we came to office, inflation had a 6 in front of it; now it’s around a third of that. Very, very encouraging development. Absolutely outstanding numbers today, right across the board. That’s a very good thing. No doubt the Reserve Bank Board will weigh that up. They’ll weigh up what we’re seeing in the labour market and in other parts of our economy. They’ll come to a considered and independent view when it next meets in August.
Gilbert:
Obviously you’re not going to buy into the speculation, the analysis that says the RBA has been too cautious in holding off for its next meeting on August 12. But I want to ask you about the change in November, with the ABS making its monthly reporting of inflation more thorough, the basket of goods becomes more comprehensive. You would welcome that because it enables the RBA to move more quickly rather than wait for the next quarterly number that is more comprehensive. They can do it month to month.
Chalmers:
More than welcome the improvement in the monthly data, we’re delivering it. I shout out here, Andrew Leigh, very passionate about these things, David Gruen at the ABS. They’ve been working very hard to make sure that the extra funding we’ve provided can be turned into more regular, more robust inflation data that will help the Reserve Bank Board make its decisions. But it will also help the government, the community more broadly, the business community, to understand developments on inflation closer to real‑time in a monthly way. It’s a very, very good development.
But we’ve got a monthly number today which is actually below the Reserve Bank’s target band. 1.9 per cent in monthly terms, 2.1 quarterly. We’ve seen trimmed mean inflation on both of those measures, quarterly and monthly, come down as well. That’s why these are outstanding numbers. Very, very encouraging. And what it shows is the remarkable progress that Australians have made together. The fight against inflation has been the defining challenge in our economy for some years now, even before we came to office. When we came to office, inflation was multiples of what it is now, and it was absolutely galloping.
And what Australians have been able to do in the last few years is nothing short of remarkable, because we’ve got inflation down without paying for it with substantially higher unemployment. We’ve got real wages growing again. We’ve made a lot of progress in inflation and more broadly in our economy. But we know there’s more work to do because the global environment’s uncertain, we’ve got persistent structural issues in our economy, and people are still under pressure as well. And that’s why we’re rolling out this cost‑of‑living relief this month in the most responsible way that we can as well.
Gilbert:
And only about 30 seconds left. I know you’ve got to get going, but should it rewrite the way people think about the orthodoxy when it comes to unemployment vis‑à‑vis rates and inflation, the fact that there was an expectation unemployment would have to shoot up before rates came down?
Chalmers:
I think certainly when you compare it to the history of inflation spikes in the past, when you compare it around the world – at the moment, we’ve got inflation rising in the US, UK, New Zealand and Canada, and falling in Australia, but we’ve got very low unemployment. There’s no major advanced economy in the world, Kieran, that’s got our combination of inflation in the low 2s, unemployment in the low 4s, and had 3 years of continuous economic growth. And so, we are rewriting the rules. And Australians should be very proud of that. Every Australian deserves to share in the credit of this progress that we’ve made together on inflation borne out in the numbers today.
Gilbert:
Treasurer, thanks for your time on that developing news. Appreciate it.
Chalmers:
Thanks, Kieran.