Weekend edition: A budget that sets fiscal policy against monetary policy

Friday 18th May 2024

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There’s been a lot said about the Labor federal budget this week. One of the big questions is whether the energy subsidy alongside the tax cuts and rent assistance, will do enough to bring down inflation. In this Weekend Edition JB Were’s Sally Auld argues that, whilst we might see a reduction in headline inflation, the government’s fiscal expansion is at odds with the RBA’s monetary policy and it is likely to delay any moves down in interest rates. The extra government spending might be worthwhile if it can be shown to improve productivity, but its not clear how that will happen. There is recognition, however, that these are unusual times and the need for greater onshoring and a need for governments to fast track support for emerging sectors. But how?

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