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It is the RBA’s job to fight inflation, but governments must do more to help
An editorial argues Australian governments must do more to help the RBA fight inflation, not leave the job to rate rises alone.
Key points
- The RBA is expected to raise official interest rates to an 18-year high on Tuesday.
- The federal budget recorded a $22.5 billion deficit last financial year, with deficits above $30 billion predicted for the next two years.
- Chalmers has indicated spending cuts are being considered as part of next month's mid-year budget review.
Why it matters. Households and businesses may have to adjust to interest rates higher than they have become accustomed to over the past decade or so.
The Reserve Bank of Australia is expected to lift official interest rates to an 18-year high on Tuesday, its fifth rise this year. The editorial says inflation has worsened despite four earlier hikes, and that the RBA is aiming to bring price growth back into its 2 to 3 per cent target band. The federal budget posted a $22.5 billion deficit last financial year, with deficits above $30 billion forecast for this year and the next.
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It is the RBA’s job to fight inflation, but governments must do more to help
The RBA and Australian governments are pulling in opposite directions. No wonder inflation pressures persist. Editorial November 2, 2026 — 5:00am The Reserve Bank of Australia is expected to lift official interest rates to an 18-year-high on Tuesday. The inflation outlook has deteriorated in the past few months despite four previous rate hikes this year. Prime Minister Anthony Albanese last week told this masthead interest rates are a “blunt instrument” causing pain to mortgage holders. Prime Minister Anthony Albanese is bracing for a fifth interest-rate rise this year. Alex Ellinghausen But the RBA is set to use that tool again in a bid to bring price growth back to its target band of between 2 and 3 per cent – failing to do so risks much greater economic damage over the longer term. The nagging persistence of price pressures in the economy has drawn attention to the role government spending is playing in Australia’s inflation problem. The federal budget registered a budget deficit of $22.5 billion last financial year, and deficits of more than $30 billion are predicted for this financial year and the next. It is increasingly clear those deficits cannot not be justified given the magnitude of the inflation challenge, especially when economy continues to grow and unemployment is fairly low by historical standards. In effect, the RBA and the federal government are pulling in opp.