hiking the cash rate to 3.85 per cent on Tuesday<\/a>, however, many leading economists have raised concerns about public spending\u2019s role.<\/p>\nAMP\u2019s chief economist Shane Oliver said the \u201cbest thing government can do to help alleviate\u201d inflation and interest rate rises is \u201cto lower the level of public spending\u201d.<\/p>\n
Treasurer Jim Chalmers has blamed the surge of private sector spending, a point mentioned in the RBA Board\u2019s statement on Tuesday.<\/p>\n
Despite disagreement over what is driving inflation\u2019s rise, Jarden\u2019s chief economist Micaela Fuchila laid out some crucial ways the government can help limit inflation.<\/p>\n
She lauded the government\u2019s decision to roll back subsidies \u2013 such as the power rebates which Labor discontinued at the end of 2025 \u2013 as crucial for bringing down price pressures in the long-term.<\/p>\n
\u201c(With) removing subsidies, optically they increase inflation at the start, but later on \u2026 no subsidies are better than subsidies in terms of the outlook for inflation,\u201d Ms Fuchila told Business Now.<\/p>\n
She also called for the government to boost productivity growth, which sits near historical lows at about 0.8 per cent annually, and getting power prices down without rebates.<\/p>\n
\u201cGet electricity prices back down in a different way than (bringing) rebates in,\u201d Ms Fuchila said.<\/p>\n
\u201cThat will help to understand where inflation is coming from.\u201d<\/p>\n
Inflation may have peaked in some aspects of the economy, however, as Ms Fuchila noted public sector wages growth had likely hit their limit last year.<\/p>\n
She also called for a \u201ccoordinated effort\u201d to support the inflation outlook from \u201call levels of governments and the RBA\u201d to help taper price pressures.<\/p>\n
Ms Fuchila\u2019s calls come as government spending as a percentage of GDP has sat at an average of 22 per cent since the 1960s but ballooned to about 28 per cent since the high levels of government spending during the pandemic.<\/p>\n
Meanwhile, inflation is not forecasted to drop within the RBA\u2019s 2-3 per cent target band this year.<\/p>\n
Money Markets expect at least one other rate rise this year, however, it remains unclear whether a second could follow.<\/p>\n","protected":false},"excerpt":{"rendered":"The government has been told of some crucial ways to help limit inflation and keep rate rises to…\n","protected":false},"author":2,"featured_media":459249,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164,20309,5465,9565,236188,14819,121546,7054,183,5716],"class_list":["post-459248","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy","tag-government-spending","tag-inflation","tag-interest-rate","tag-micaela-fuchila","tag-michele-bullock","tag-public-spending","tag-rba","tag-reserve-bank-of-australia","tag-shane-oliver"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/459248","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=459248"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/459248\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/459249"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=459248"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=459248"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=459248"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}