Jim Chalmers (Rankin, Australian Labor Party, Treasurer) Share this | Hansard source

Thank you to the member for Macquarie for her very timely question, because the Reserve Bank has indicated in the last few minutes that they will be leaving rates on hold at 4.35 per cent. Australians would understand that this outcome today is not a surprise; it was an outcome that has been flagged well in advance by the Governor of the Reserve Bank. What this means is rates have not gone up since last Melbourne Cup Day, so it has been a year since rates last went up and that reflects two things: firstly, the impact of rate rises already in the system. Australians are already doing it tough enough when it comes to dealing with these higher interest rates.

Secondly, it reflects the progress we are making together in the fight against inflation. We saw that in last week's inflation numbers. Inflation is back in the target band for the first time since 2021. It means the inflation we inherited at 6.1 per cent is now 2.8 per cent. At the same time as underlying inflation is coming down, monthly inflation is coming down in welcome and encouraging ways. When we came to office, inflation was much higher and rising; now it is much lower and falling. But we know people are still doing it tough and that is why our cost-of-living help is so important.

The outcome today is not a surprise, but I direct the House to the new forecast released by the independent Reserve Bank today. Because what those forecasts show, whether it is headline inflation or trimmed mean inflation, is that they have lowered their forecasts for inflation over the next little while. If you take inflation overall—headline inflation—they have downgraded it for the end of this year from three per cent to 2.6, for the middle of next year from 2.8 to 2.5—the middle of the band—and they have downgraded inflation to even out in 2026.

For those opposite who asked me about trimmed mean inflation, they should recognise that the Reserve Bank have lowered their forecast for trimmed mean inflation across all of the forecast period. What this shows is that we have been able to fight inflation without ignoring risks to growth and without sacrificing the gains we made in the labour market. We have struck the right balance by taking the right economic decisions for the right economic reasons. Because of that, we are confident but not complacent about a soft landing in our economy. We would much prefer a soft landing than to clean up after the hard landing that those opposite would prefer for political reasons. What these new forecasts show is that we continue to make welcome and encouraging progress in the fight against inflation, and the new forecasts released by the independent Reserve Bank in the last few minutes go to that point.

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