Jim Chalmers won’t override RBA decision as suggested by Greens

The Greens’ call for the government to override Tuesday’s shock RBA decision has fallen on deaf ears.

Treasurer Jim Chalmers says the RBA’s surprise decision to raise rates will be tough for Australians, but he won’t be drawn into the Greens’ calls for the government to override the latest hike.

After the board’s decision to raise rates by 25 basis points to 3.85 per cent – an 11-year high – Greens leader Adam Bandt on Wednesday said the government had an opportunity to make things easier for Australians already suffering under the impact of the 11 rises since last May.

While he conceded Tuesday’s decision, which caught the market by surprise, was a “pretty blunt, pretty brutal” reminder of a slowing economy, Dr Chalmers said he would not interfere with the independent process.

Mr Bandt said Australians were suffering and the government had the power to intervene in “crisis moments like this”.

“This is the wrong decision from the Reserve Bank … The Reserve Bank and the government are using everyday people as cannon fodder in the war on inflation,” Mr Bandt told ABC Radio.

Greens leader Adam Bandt wants the government to override Tuesday’s RBA decision. Picture: NCA NewsWire / Gary Ramage

“The problem is when you’re the RBA, and the only tool that you’ve got is a hammer, then every problem looks like a nail, and they’re pushing interest rates up and pushing the country towards a recession, and they’re making everyday people bear the brunt of the inflation crisis that we’re facing.

“The government has the power to act and step in and say this is the wrong decision from the Reserve Bank.”

Dr Chalmers said he wouldn’t take his economic advice from the Greens and pointed at a recommendation of last month’s wide-ranging RBA review that outlined an even stronger independence.

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

“I won’t be intervening in the way that the Greens have suggested. I think that independence is a cherished part of the system.”

The Treasurer says he won’t override the RBA’s independence. Picture: NCA NewsWire / Martin Ollman

Dr Chalmers said instead, as he puts the finishing touches on next week’s budget, the government was committed to balancing providing cost of living relief to the “most vulnerable Australians” while not adding any more inflationary pressures.

“And one of the difficult judgments that we have to make as we put the finishing touches on this budget is how to provide that cost of living relief that people need,” he said.

“How do we target it at the most vulnerable Australians, at the same time as we show restraint elsewhere in the budget. And what people will see on Tuesday night is a budget which provides cost of living relief in the most responsible way, at the same time as we lay foundations for future growth and make our economy and our budget and our communities more resilient at a time of substantial global uncertainty.”