Federal budget spending pushed interest rate move by RBA: Economists

to 0.35 per cent, the first increase since 2010 and the first during an election campaign since 2007.

Economist Steven Hamilton, a visiting fellow at the Tax and Transfer Policy Institute at the Australian National University, said there was no doubt the extra spending in the budget – on top of what was being promised by both major parties during the campaign – had been a factor in the Reserve Bank’s move.

RBA governor Philip Lowe on Tuesday said there was a “lot of positive momentum” in the economy at present with the bank forecasting the economy to expand by more than 4 per cent this year. Frydenberg, in a debate with shadow treasurer Jim Chalmers, said Treasury had made clear when putting together the budget that the cost-of-living measures would not have a material impact on inflation.Liv Cameron

Frydenberg said for someone on full-time average earnings, inflation would out-pace wages growth by $900 this year but the government was delivering $1500 in tax relief from July 1.Beyond that, wages growth is still expected to be short of inflation, leaving people going backwards until the second half of next year.

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