RBA kills off Frydenberg’s Pollyanna inflation forecasts

Both leaders faced scrutiny today on the campaign trail, but it was the Reserve Bank that seized the spotlight again by predicting inflation as far as the eye can see.

Former prime minister Malcolm Turnbull and Treasurer Josh Frydenberg (Image: AAP)

The government’s budget forecasts for inflation have been demolished by the Reserve Bank (RBA) in its latest Statement of Monetary Policy, released as the fourth week of campaigning draws to a close.

The RBA’s quarterly statement updates its economic forecasts and the May edition makes plain that the Bank expects high inflation to be a feature of the Australian economy for years to come.

While the March budget from Treasurer Josh Frydenberg predicted inflation for the current financial year of 4.25%, and in 2022-23 of 3%, the RBA now expects CPI to reach 5.5% in June, and 4.25% in 2022-23. Both are substantial upward revisions from its last Statement in February. Inflation is forecast to still be at 3%, the top of the RBA’s target rate band, in mid-2024.

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