Australia’s Treasurer Jim Chalmers said on Wednesday that the country is not on track for a recession in 2023 despite the central bank again raising interest rates.
The Reserve Bank of Australia (RBA) on Tuesday raised interest rates for the ninth meeting in a row to 3.35 per cent, reports Xinhua news agency.
Making the announcement, RBA Governor Philip Lowe said he expects further increases will be needed to ensure inflation returns to target.
Responding to the move, Chalmers said there were signs inflation has begun to moderate.
“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 told Australian Broadcasting Corporation radio.
“There is of course, as the RBA Governor acknowledged in the statement yesterday, the fact that when interest rates go up, people with a mortgage feel it immediately but the impact on the economy takes a little while to flow through.”
Australia’s inflation hit 7.8 per cent in the 12 months to December 2022, the highest it has been since 1990, with housing costs rising 10.7 per cent.
Stephen Jones, the Assistant Treasurer, said that Tuesday’s rate rise should mark the peak of the monetary tightening cycle, warning that households are “doing it tough”.
“We think that inflation has peaked and it is starting to turn around,” he told Sky News on Wednesday.
“So we’re hoping that this is, if not the last, then nearly the last of the interest rate increases.”