The Reserve Bank of Australia (RBA) raised its cash rate 25 basis points to a decade-high of 3.35% on Tuesday and reiterated that further increases would be needed, a more hawkish policy tilt than many had expected. "I accept that the board's language yesterday was pretty straightforward in that regard," Chalmers said in an interview with state broadcaster ABC, when asked whether the change in language by RBA Governor Philip Lowe meant multiple rate rises were still to come.
He added he did not want to pre-empt any future policy decisions by the RBA.
Australia is battling stubbornly high inflation, with a higher cost of living and continued rate hikes already starting to impact spending. The Treasury expects the economy to slow considerably as a result of higher interest rates, as well as a global slowdown in growth, Chalmers said, though he ruled out the possibility of a recession.
"The expectation of the Treasury forecasters is higher interest rates combined with difficult global conditions will slow our economy considerably, but they don't expect at this point a recession here in Australia," he said.
Lowe, who has faced criticism for earlier forecasting that rates would stay at record lows until 2024, has a seven-year term that concludes in September. "Obviously, all options are on the table," Chalmers told reporters on Wednesday, when asked whether Lowe's term would be extended.
"His term doesn't conclude until September. In the ordinary
course of events that appointment would be considered closer to
the middle of the year."
(Reporting by Alasdair Pal in Sydney; Editing by Stephen
Coates)
