Anthony Albanese hopeful inflation has peaked, as more interest rate rises forecast

Anthony Albanese says Australia is not immune to a recession as the latest rate rise adds pressure to struggling families.

The Prime Minister warned Australia was not immune from the global economic risk of recession as the latest rate rise puts more pressure on households.

The Reserve Bank put rates up for a ninth consecutive time on Tuesday, and issued a warning that more rises were to come as a means to tame high inflation.

The decision to hike rates up by 0.25 per cent brings the current interest rate to 3.35 per cent, meaning average repayments on a $750,000 home loan have now risen nearly $1400 a month compared to this time last year.

Yet despite the mounting pressure, Anthony Albanese said he was hopeful that inflation had peaked.

But when asked about whether he was concerned the ongoing rate rises would push Australia into a recession, he said Australia was “not immune” from the impact of the global economy.

“And what we will see from here is a downward trend. We know that the global economy arising from the Russian invasion of Ukraine has seen a global spike in inflation, and we know that in some advanced economies that reached double digits,” he said on Wednesday morning.

“It hasn’t reached that here, but it is clearly having an impact.

“We’re not immune from the impact of the global economy.”

Prime Minister Anthony Albanese said he was hopeful inflation had peaked. Picture: NCA NewsWire / Gary Ramage

Treasurer Jim Chalmers also offered little hope the government could make major interventions to target the rising cost-of-living, reiterating the delicate balancing act in order to not push inflation higher.

“I genuinely understand that when rates go up, it puts extra pressure on people and it puts extra pressure on our economy … And the inflation challenge in our economy, which is making some of these interest rate rises necessary, is the government’s major focus,” he told ABC Radio.

“And that’s why we’re showing spending restraint, we’re providing cost-of-living relief, we’re dealing with these issues in the supply chain, including in the workforce, because … high inflation and high interest rates (are) the defining challenge in the economy right now.”

Treasurer Jim Chalmers warned cost-of-living relief could not put further pressure on inflation. Picture: NCA NewsWire / Gary Ramage

He noted there would be about $1.5 billion in cost-of-living relief contained in the May budget.

Deputy Opposition leader Sussan Ley said the ongoing interest rate rises were prompting Australian families to make “tough” decisions.

“You know (like) ‘what do we not spend money on? Do we not take a holiday? Do we not undertake that expenditure for our family for our future?’ It’s all going on the mortgage,” she told Sky News.

“And with 800,000 Australians coming off fixed rates, there could be a jump of several percentage rates in their mortgage payments, which adds up to $10,000 to $15,000 a year … It’s really sobering news.”

She said the Treasurer’s response to the rate rise, and warning of further pain, was “pathetic”.

“We’re seeing no economic plan,” Ms Ley said.

As for whether she had confidence in the RBA, Ms Ley said she wasn’t going to criticise the central bank, putting the blame wholly on the government who she says “fails to recognise the pain that its economic policies are causing ordinary Australians”.

Dr Chalmers refused to be drawn on whether he believed RBA Governor Philip Lowe should resign from his post, noting his term is up at the end of the year.

The cabinet will decide ahead of the September term expiry whether or not to extend Mr Lowe’s tenure.

“The normal course of events the government would consider that … closer to the middle of the year I would consult with my colleagues,” he said.

Asked about whether the government would heed the Greens’ call to overturn the rate rise, Dr Chalmers pointed to the RBA review, currently underway, saying he wanted to make sure Australia’s central bank was “the world’s best”.

“But it’s not about messing with the banks independence,” he said.

Mr Albanese said the independent Reserve Bank was a “very important principle”.