Treasurer Jim Chalmers urged to overturn RBA’s latest rate rise

While acknowledging the difficulty the Reserve Bank of Australia’s (RBA) interest rate hike may cause for Australians, Treasurer Jim Chalmers has firmly dismissed the Green’s request to overturn the decision.

During its Tuesday, May 7 meeting, the RBA decided to increase the cash rate target by 25 basis points to 3.85 per cent. It also increased the rate paid on Exchange Settlement balances by 25 basis points to 3.75 per cent.

In response to the RBA’s decision, Greens Treasury spokesperson Senator Nick McKim called on Chalmers to “step in and overrule the decision”.

“This decision beggars belief and will smash renters and mortgage holders even harder than they were being smashed already,” McKim said.

“On the RBA’s own admission, interest rate rises are the wrong response to an inflation spike driven by corporate profiteering and supply side issues.

“The RBA is out of control. Treasurer Jim Chalmers needs to use the powers that he has and step in and overrule this decision.

“This is exactly the situation that Section 11 of the RBA Act was designed for.

“If Grim Jim Chalmers refuses to act it will be a tacit endorsement of the RBA smashing renters and mortgage holders.”

At its meeting today, the Board decided to increase the cash rate target by 25 basis points to 3.85 per cent. It also increased the rate paid on Exchange Settlement balances by 25 basis points to 3.75 per cent. https://t.co/ZBGsPMEPNq

— Reserve Bank of Australia (@RBAInfo) May 2, 2023

Although Chalmers conceded that the rise is “a really difficult decision for a lot of Australians who are already under the pump” he would not “be intervening in the way that the Greens have suggested”.

“The importance of the Reserve Bank is an important feature of the system,” he told ABC News.

“I think that independence is a cherished part of the system.”

During an earlier press conference in which he offered his response to the RBA’s decision, Chalmers acknowledged the difficult economic conditions the nation is currently facing while touting the upcoming Budget’s expected cost of living relief measures.

“Today, the Reserve Bank has lifted interest rates by a quarter of a per cent,” he told reporters.

“This is a reminder that inflation remains the primary challenge in our economy. This is a reminder of the difficult economic conditions in which we frame the second Budget. The Budget is in a week’s time from now. The priorities in that Budget will be responsible cost‑of‑living relief that doesn’t add to inflation.

“Laying the long term foundations for future growth and opportunity in our economy, and also making our Budget and our economy and our people and our country much more resilient to the sorts of global economic uncertainty that we’ve seen in recent times.

“It will be a responsible Budget, it will have two main tasks; to see people through a difficult period and to set this country up for the future. We know and this interest rate decision today is a reminder, of the complex combination of economic pressures that are being felt right around the country.

“The Budget will seek to alleviate some of that pressure, at the same time as it positions this country to take advantage of the remarkable opportunities that lay ahead. The Budget is in a week’s time.”