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MNI: Tax Cuts, Fiscal Policy Seen Complicating RBA's Job

(MNI) Melbourne

Tax cuts due July 1 will add AUD20 billion to the pockets of Australian taxpayers, potentially making the RBA's task harder.

The Australian government’s fiscal stance will add upward pressure to inflation, reducing the likelihood of a Reserve Bank of Australia cash-rate cut until late 2024 at the earliest and potentially adding to further rate rises, prominent economists and former staffers told MNI.

Brendan Coates, economic policy program director at the Grattan Institute, said the stage three tax cuts – while likely already baked into RBA and Treasury forecasts – will keep inflation elevated.

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The Australian government’s fiscal stance will add upward pressure to inflation, reducing the likelihood of a Reserve Bank of Australia cash-rate cut until late 2024 at the earliest and potentially adding to further rate rises, prominent economists and former staffers told MNI.

Brendan Coates, economic policy program director at the Grattan Institute, said the stage three tax cuts – while likely already baked into RBA and Treasury forecasts – will keep inflation elevated.

Keep reading...Show less