challenged by the Reserve Bank Governor Michele Bullock<\/a>, who said that public spending was part of the inflation problem.<\/p>\nWhen asked by Liberal MP Simon Kennedy if government spending affected the bank’s decisions, Ms Bullock said: \u201cIt does, as does private. It\u2019s part of aggregate demand.\u201d<\/p>\n
Ms Bullock later added that government programs such as energy rebates could flow directly into household spending.<\/p>\n
\u201cWhat it often does is it transfers money to people, and it gives them money to spend\u2026 It\u2019s all part of aggregate demand,\u201d she said.<\/p>\n
Meanwhile, economists have been increasingly vocal in calling for tighter fiscal policy, warning elevated public spending has complicated the RBA\u2019s fight against inflation.<\/p>\n
AMP chief economist Shane Oliver said \u201cthe best thing\u201d the government could do to help bring inflation down would be to cut spending.<\/p>\n
\u201cYou\u2019ve got to go back to World War II to see public spending as a share of the economy around these levels,\u201d Mr Oliver recently told Sky News.<\/p>\n
Government spending as a percentage of GDP has sat at an average of 22 per cent since the 1960s.<\/p>\n
But this has ballooned out to about 28 per cent since the high levels of government spending during the pandemic, which did not abate following lockdowns.<\/p>\n
EQ Economics managing director Warren Hogan warned that if governments failed to restrain spending, the RBA could be forced to push rates higher.<\/p>\n
\u201cIf the governments of Australia do nothing, I think the RBA is going to have to take the cash rate above where it was a year ago \u2014 above 4.35 (per cent),\u201d Mr Hogan said.<\/p>\n
Sky News Pulse will release complete political polling data, including primary vote and two-party preferred data at 5am on Wednesday. Join SkyNews.com.au for more.<\/p>\n","protected":false},"excerpt":{"rendered":"Voters have blamed the Albanese government for rising interest rates amid concerns about fiscal policy fuelling inflation. The…\n","protected":false},"author":2,"featured_media":470711,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[16169,64,8931,63,99,5693,164,69,20309,5465,5626,42086,1788,31478,7054,183,240380,13998],"class_list":["post-470710","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-albanese-government","tag-au","tag-auspol","tag-australia","tag-business","tag-economics","tag-economy","tag-federal-government","tag-government-spending","tag-inflation","tag-interest-rates","tag-jim-chalmers","tag-labor","tag-labor-party","tag-rba","tag-reserve-bank-of-australia","tag-sky-news-pulse","tag-treasury"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/470710","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=470710"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/470710\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/470711"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=470710"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=470710"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=470710"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}