Albanese Labor Govt Watch

[am Bays]

Interest rates up .25% to 3.85%.

Thanks Albo and Jim....

Gee even Jacqui Lambie this morning said this was out of our government’s control, world forces has caused it.

That like quoting Pauline as an expert on Multiculturalism

[Jimmy_041]

Interest rates up .25% to 3.85%.

Thanks Albo and Jim....

Gee even Jacqui Lambie this morning said this was out of our government’s control, world forces has caused it.

Considering they were claiming credit when interest rates dropped, they can suck the increases up as well.

[Jim05]

Interest rates up .25% to 3.85%.

Thanks Albo and Jim....

Gee even Jacqui Lambie this morning said this was out of our government’s control, world forces has caused it.

Considering they were claiming credit when interest rates dropped, they can suck the increases up as well.

This so much.

Everyone with half a brain knows that world forces play a huge part in economics but when you run around claiming that you are responsible for lowering rates you can’t just throw your hands in the air when they go the other way

[dedja]

Every govt will try the good news = us, bad news = out of our control routine, this one is no different.

Their recent patting themselves on the back didn’t account for inflation rising, and to be fair, not many saw this coming a few short months ago.

So yes, they do look like idiots now.

[Brodlach]

All true points

[Jimmy_041]

Every govt will try the good news = us, bad news = out of our control routine, this one is no different.

Their recent patting themselves on the back didn’t account for inflation rising, and to be fair, not many saw this coming a few short months ago.

So yes, they do look like idiots now.

I beg to differ. Many economists said the cuts were stupid and would come back to bite them.
The RBA can deny it all they want but the cut just before the election was politically motivated.
Remember when Keating winked, and put on that stupid grin of his, when someone had the gall to say the RBA decisions were independant of the Treasurer

[dedja]

Every govt will try the good news = us, bad news = out of our control routine, this one is no different.

Their recent patting themselves on the back didn’t account for inflation rising, and to be fair, not many saw this coming a few short months ago.

So yes, they do look like idiots now.

I beg to differ. Many economists said the cuts were stupid and would come back to bite them.
The RBA can deny it all they want but the cut just before the election was politically motivated.
Remember when Keating winked, and put on that stupid grin of his, when someone had the gall to say the RBA decisions were independant of the Treasurer

Disagree, when the RBA eased the cash rate by 25 basis points last August, the vast majority of analysts expected further easing in 2026.

[Brodlach]

According to Zalii Steggle a lot of the current inflationary pressures is coming from the private business sector investing in new technologies and extra staff combined with government spending. She then went on to say the increased areas of government spending was NDIS (this needs to be slashed significantly IMO), health and old age sectors where people have been crying out for more funding.


NDIS is taking the piss IMO.


Even the RBA didn’t blame the government

[wenchbarwer]

Every govt will try the good news = us, bad news = out of our control routine, this one is no different.

Their recent patting themselves on the back didn’t account for inflation rising, and to be fair, not many saw this coming a few short months ago.

So yes, they do look like idiots now.

I beg to differ. Many economists said the cuts were stupid and would come back to bite them.
The RBA can deny it all they want but the cut just before the election was politically motivated.
Remember when Keating winked, and put on that stupid grin of his, when someone had the gall to say the RBA decisions were independant of the Treasurer

Disagree, when the RBA eased the cash rate by 25 basis points last August, the vast majority of analysts expected further easing in 2026.

The same analysts that were 50/50 split on a rate rise on Monday? Far too many of these guys just guess, have about as much credibility as the BoM

[dedja]

The vast majority expected a rise yesterday, especially the banks, so no, it wasn’t 50/50.

[wenchbarwer]

The vast majority expected a rise yesterday, especially the banks, so no, it wasn’t 50/50.

https://www.finder.com.au/rba-cash-rate

It was 51/49

[Brodlach]

The vast majority expected a rise yesterday, especially the banks, so no, it wasn’t 50/50.

https://www.finder.com.au/rba-cash-rate

It was 51/49

So Dedja was right

[dedja]

[wenchbarwer]

The vast majority expected a rise yesterday, especially the banks, so no, it wasn’t 50/50.

https://www.finder.com.au/rba-cash-rate

It was 51/49

So Dedja was right

By a vast majority

[Jimmy_041]

According to Zalii Steggle a lot of the current inflationary pressures is coming from the private business sector investing in new technologies and extra staff combined with government spending. She then went on to say the increased areas of government spending was NDIS (this needs to be slashed significantly IMO), health and old age sectors where people have been crying out for more funding.


NDIS is taking the piss IMO.


Even the RBA didn’t blame the government

They would do everything to avoid that

[Jimmy_041]

Every govt will try the good news = us, bad news = out of our control routine, this one is no different.

Their recent patting themselves on the back didn’t account for inflation rising, and to be fair, not many saw this coming a few short months ago.

So yes, they do look like idiots now.

I beg to differ. Many economists said the cuts were stupid and would come back to bite them.
The RBA can deny it all they want but the cut just before the election was politically motivated.
Remember when Keating winked, and put on that stupid grin of his, when someone had the gall to say the RBA decisions were independant of the Treasurer

Disagree, when the RBA eased the cash rate by 25 basis points last August, the vast majority of analysts expected further easing in 2026.

I'm talking about February 2025

[dedja]

Every govt will try the good news = us, bad news = out of our control routine, this one is no different.

Their recent patting themselves on the back didn’t account for inflation rising, and to be fair, not many saw this coming a few short months ago.

So yes, they do look like idiots now.

I beg to differ. Many economists said the cuts were stupid and would come back to bite them.
The RBA can deny it all they want but the cut just before the election was politically motivated.
Remember when Keating winked, and put on that stupid grin of his, when someone had the gall to say the RBA decisions were independant of the Treasurer

Disagree, when the RBA eased the cash rate by 25 basis points last August, the vast majority of analysts expected further easing in 2026.

I'm talking about February 2025

I was talking about August 2025, so we’re both right.

[Jimmy_041]

According to Zalii Steggle a lot of the current inflationary pressures is coming from the private business sector investing in new technologies and extra staff combined with government spending. She then went on to say the increased areas of government spending was NDIS (this needs to be slashed significantly IMO), health and old age sectors where people have been crying out for more funding.

NDIS is taking the piss IMO.

Even the RBA didn’t blame the government

That is misleading considering this piece from the AFR.
Making no comment at all does not equal not blaming the government

Economists question Michele Bullock’s silence on fiscal policy
Luke Kinsella
Reporter
Feb 4, 2026 – 7.18pm

Economists have questioned the reluctance of Reserve Bank of Australia governor Michele Bullock to answer questions about the impact of government spending on inflation after the central bank’s decision to raise the official interest rate for the first time in more than two years.

Treasurer Jim Chalmers was also criticised for “cherry-picking” comments from one of the economists he nominated in a media interview as supporting his argument that federal and state government spending was not one of the factors that contributed to the inflation spike over the past six months that has created a political headache for Labor.

RBA boss Michele Bullock said that she didn’t want to tell Jim Chalmers how to run fiscal policy, but economists said she could have gone further in explaining the role of public demand in the economy. Bethany Rae

Former NSW Treasury chief economist Stephen Walters said he was “taken aback” by Bullock’s reluctance to talk about government spending during her press conference after the bank board’s unanimous decision on Tuesday to raise the cash rate from 3.6 per cent to 3.85 per cent.

“It did strike me that [Bullock] didn’t discuss one of the major reasons that inflation had popped up again,” said Walters, director of Optimal Economics. “She managed to step around that quite adroitly, but I was a bit surprised she was that determined not to talk about fiscal policy.”

Treasury forecasts federal government spending to account for 26.9 per cent of the economy in 2025-26, the highest level since 1986 (excluding the pandemic). While private sector activity overtook public demand late last year, the RBA expects public demand to drive around half of all economic growth in 2026.

Headline inflation spiked to 3.8 per cent in December, which prompted the RBA board to hand mortgage holders their first lift in official interest rates since November 2023. All four big banks have passed on the rate increase.

At her regular post-meeting press conference, Bullock was asked three times by journalists whether government spending was contributing to inflation, but did not directly answer the questions each time.

“I’m not going to tell the government what to do with fiscal policy. That’s not my business,” Bullock said. “I’m not going to comment on fiscal policy because it’s an independent policy.”

Walters said while Bullock did a good job in her toughest press conference yet, fiscal policy was a legitimate issue to discuss.

“It’s clearly one of the major arms of policy in our economy, alongside monetary policy … I completely understand the political sensitivities, but I think it’s a big gap in her conversation,” he said.

Bullock would say that inflation was driven by total demand, which includes private and public demand. She said governments have to supply services and build infrastructure, which the RBA took as a “given” in its forecasts for the economy.

Chalmers has repeatedly pushed back on suggestions public demand was contributing to inflation, saying last week the government’s budget settings played no role.

“Our opponents and their cheerleaders in the media want to pretend that there’s a unanimous view about economists,” Chalmers told ABC Radio on Wednesday. “There rarely is, and there isn’t in this instance either.”

Chalmers played down the impact of “government spending in these inflation figures” by citing Commonwealth Bank economist Belinda Allen, Westpac chief economist Luci Ellis and economists at AMP as saying government spending had eased. But AMP’s deputy chief economist Diana Mousina said Chalmers had “cherry-picked” her comments.


“It’s likely we’re going to see a lower pace of growth in government spending next financial year [in 2026-27]. But I didn’t say the government was not contributing to inflation. It is playing some role,” she said.

Allen declined to comment. Ellis said the treasurer had accurately cited her analysis that private demand had overtaken public demand in 2025.

Chalmers also referred to Bullock’s reluctance to discuss public demand publicly, which economists at the RBA expect will contribute more to growth in 2026, as proof of government spending not contributing to inflation.

“That does not mean that government spending is not having an impact on inflation. It just means she didn’t mention it,” Walters said, adding that government spending was “clearly” adding to inflation.

“It’s crowding out the private sector. The only implication of that has to be that prices go up. So I don’t think it’s even a debate.”

Westpac senior economist Pat Bustamante said Bullock should have at least explained how public demand was affecting the bank’s forecasts.

He said public demand being about 28 per cent of gross domestic product in 2025 – the highest on record – was one of the biggest economic transitions in modern history and deserved a mention during the press conference.

Former RBA governors Philip Lowe and Glenn Stevens were known to occasionally publicly discuss budget policy and suggest economic reforms for governments to consider, upsetting both Coalition and Labor governments at the time.

While still governor in 2023, Lowe said weak productivity growth was behind higher labour costs, contributing to a post-pandemic jump in inflation. In 2016, Stevens said there was work to do on repairing the budget.

KPMG chief economist Brendan Rynne also said it was “curious” that Bullock did not comment on the role of government spending.

“It is appropriate for the governor to be commenting on the level of spending that is occurring from the public sector,” he said. “The data suggests it does influence both elements of the RBA mandate.”

The RBA has a legislated mandate to keep inflation between 2 and 3 per cent, while maintaining full employment.

Spending by state and federal governments can add to demand in the economy, which contributes to inflationary pressures if the supply side does not keep up due to low productivity growth.

The government’s review into the RBA in 2023 recommended that the central bank work with the Treasury and the government to analyse the impacts of fiscal policy decisions on monetary policy.

“Independence does not mean fiscal and monetary policy should be set in isolation from each other,” the review said, calling for more dialogue between policymakers at the RBA and the government.

The review said that the purpose of the Treasury secretary sitting on the RBA board – an unusual arrangement by international standards – was to give their view on fiscal policy.

Former RBA board member Warwick McKibbin agreed that spending was at a record high, so it had to be playing some role in the return of inflation to above the central bank’s target band.

“Demand is coming from both the private and public sectors,” he said.

But McKibbin said given the international concerns around central bank independence, he understood why Bullock would not weigh in.

While central bank independence is largely well respected in Australia, Chalmers was criticised for questioning the RBA’s mandate to control inflation when he blamed interest rate increases for “smashing the economy”.

“He crossed the line there, in my view,” McKibbin said. “Clearly it’s the opposite. They didn’t slow [the economy] down enough.”

In 2025, The Australian Financial Review reported that Chalmers had called Bullock to say he was upset that the RBA had linked government spending to inflationary pressures, which neither denied.

[Jimmy_041]

Bullock’s silence let Chalmers off the hook on spending
Nobody is suggesting it is RBA governor Michele Bullock’s fault that politicians act expediently. But there is room for sensible, non-partisan observations to be made.

Feb 4, 2026 – 6.32pm

When Jim Chalmers appointed Michele Bullock to lead the Reserve Bank of Australia, he described her as an “outstanding economist” who would bring a fresh perspective to the institution.

A pillar of this fresh perspective was the treasurer’s RBA review, which recommended that an expert monetary board be established and that the governor hold regular news conferences after every interest rate meeting. The irony of this week’s cash rate U-turn is that Bullock has left herself open to the very criticism the new regime was meant to avoid: she has failed to communicate a complete picture of the economy.

The repeated abdication of fiscal responsibility is making it harder to tame the inflation dragon. David Rowe

After the RBA board unanimously increased the official interest rate for the first time in more than two years on Tuesday, Bullock refused to discuss the part that state and federal government spending has played in fuelling higher-than-expected inflation over the past six months.

“I’m not going to comment on fiscal policy because it’s an independent policy,” she said in her post-decision news conference. “Governments have to supply services. They have to supply goods to people, they have to build infrastructure, they have to make those policy decisions. We take that as a given.”

Instead, Bullock focused on the inflation pressures from the rebound in private consumer spending, home building and business investment. As the board statement explained, the private sector is pushing up aggregate demand and running up against capacity constraints because of the nation’s anaemic productivity.

The central bank’s monetary policy statement offered only breadcrumbs on the subject of public spending, which, in the case of the Albanese government, is rivalling the Whitlam spendathon, leaving the heavy lifting to those willing to read between the lines.

A scant reference on page 27 notes that “projections from government budgets suggest the underlying cash deficit will widen relative to GDP in 2025-26, as it did in 2024-25”.

“It is a sign of how far the Liberal Party has fallen that it is no longer seen as the natural champion of responsible economic management.”

Meanwhile, the forecast data indicates that total public demand (both state and federal spending) is forecast to jump from 2.2 per cent in December to 3.8 per cent by June this year, at the same time as inflation is expected to rise above 4 per cent. In other words, it suggests the Albanese government’s fiscal policy – or more accurately its lack of spending restraint – is effectively working against the central bank’s efforts to anchor inflation.

People who run independent central banks have difficult jobs – particularly when there is no credible opposition and the electorate is polarised. Part of the job involves talking about policy in a way that does not bleed into political criticism.

But the governor is ignoring the elephant in the room and not telling the whole story. Federal government spending over the next two years is forecast to hover around 27 per cent of gross domestic product, its highest level since 1986, excluding the pandemic stimulus years, as Labor battles to contain the costs of spending on the low-productivity care economy and the energy transition.

The consensus among economists is that continued growth in the size of the public sector will crowd out the private sector and inevitably bid up labour and other business costs.

Chalmers, of course, accused the RBA of “smashing the economy” with interest rate increases in September 2024. Past treasurers have routinely jawboned the RBA about politically sensitive rate decisions.

The 2024 phone call
As revealed by The Australian Financial Review Magazine last February, Chalmers reportedly rang Bullock in June 2024 to voice his displeasure about the RBA board statement suggesting that federal and state government spending had added to demand pressures in the economy. The treasurer has denied this and insists he is very respectful of the governor.

It’s completely within the remit of the governor of Australia’s independent central bank to comment on all policy areas that make a material difference to monetary policy settings and outcomes. That, of course, includes the contribution to inflationary pressures made by the public sector, which accounts for almost a third of the economy.

By failing to speak about all aspects of the inflation problem, Bullock created a vacuum for Chalmers’ politically convenient narrative that avoids taking responsibility for the interaction of fiscal and monetary policy in a constrained economy.

Nobody is suggesting it is Bullock’s fault that politicians act expediently. But there is room for sensible, non-partisan observations to be made. For example, she appeared at a financial conference in Washington in October, when she noted that Australia faced substantial deficits into the foreseeable future and suggested that the government “make hay while the sun shines” by returning the budget to a sustainable fiscal position.

To be clear, the governor’s job isn’t to assume the de facto role of the opposition or a political campaigner. The idea – held by some critics – that she should carry the can for the nation’s economic malaise is a misreading of her mandate. That misconception is also a symptom of the lack of a competent political opposition to hold Chalmers’ feet to the fire on fiscal irresponsibility.

It is a sign of how far the Liberal Party has fallen that it is no longer seen as the natural champion of responsible economic management.

It’s not Bullock’s responsibility to fill that political void. But it is her role to speak economic truths, even if the treasurer does not want to hear them.

[dedja]

I guess a Dr Chalmers poster isn’t replacing the Keating poster in your bedroom anytime soon?