Jim Chalmers urges “confidence, not complacency” ahead of new inflation data

The Treasurer has urged “confidence, not complacency” ahead of Wednesday’s new inflation data, which could lead the RBA into its first rate cut since 2020.

Jim Chalmers has urged “confidence, not complacency” ahead of the release of new inflation data on Wednesday, while stopping short of forecasting whether Australians could get a February rate cut.

Markets have tipped headline inflation to fall from 2.8 per cent to between 2.3 to 2.6 per cent, comfortably within the Reserve Bank’s 2 to 3 per cent target range.

However the RBA’s preferred underlying inflation figure – that removes temporary variables – is expected to sit closer to 3.3 per cent.

Wednesday’s fresh inflation figure for the December quarter comes ahead of the RBA board’s first meeting of the year on February 17-18.

Struggling households and businesses are hoping the RBA will announce the first rate cut since November 2020. The board has held the cash rate steady at 4.35 per cent since November 2023.

Treasurer Jim Chalmers called for ‘confidence, not complacency’ in the economy, with new inflation figures set to drop on Wednesday. Picture: NewsWire / John Gass

Speaking to ABC radio, the Treasurer acknowledged that despite falling inflation, households were still struggling.

“Any number with a two in front of it in the headline number will show that it’s within the Reserve Bank’s target band. Any progress on underlying inflation would be welcome as well,” he said.

“But we know that that doesn’t always immediately translate into how people are feeling and faring in the economy.

“We know that people are still battling to make ends meet.”

Despite that, he said there was “real reasons” for confidence in the economy.

“I think there is good cause for confidence, not complacency about our economy in 2025,” he said.

“We expect growth in our economy to pick up a little bit, not a lot, but a little bit.

“That will be a good thing, but primarily the reason why people can be more confident about 2025 than 2024 is we’re seeing some of the fruits of our collective efforts.”

Market expectations point to for headline inflation to fall between 2.3 to 2.8 per cent. Picture: NewsWire/ Max Mason-Hubers

While Peter Dutton said he also wanted to see interest rates “come down as quickly as possible,” he blamed Labor for not doing enough to tame inflation through increased spending and debt.

While he said the governor would make a “properly informed decision,” he added that “once inflation becomes entrenched, it’s very difficult to get rid of”.

“There are a lot of families at the moment who voted for Anthony Albanese believing good times were ahead, and (it) has been the complete opposite,” he said.

“That is why I think people are increasingly souring on the prime minister and his government.”

Mr Chalmers, however, shied away from pre-empting how the RBA would interpret the data.

“They will weigh up all of the data in our economy, the inflation numbers this week, the jobs numbers and other data and they’ll come to a decision independently without any free advice from me,” he told reporters later.

“I’m focused on my job which is getting inflation down, getting wages up, keeping unemployment low, getting the budget in much better nick at the same time as we roll out this cost of living help.”

Originally published as Jim Chalmers urges “confidence, not complacency” ahead of new inflation data