Election 2022: Jim Chalmers accuses Josh Frydenberg of bid to pressure RBA

Jim Chalmers has accused Josh Frydenberg of ‘trying to exert some political pressure’ on the Reserve Bank to hold back on a rate hike next week.

Josh Frydenberg with Higgins MP Katie Allen. Picture: NCA NewsWire / David Crosling

Labor Treasury spokesman Jim Chalmers has accused Josh Frydenberg of “trying to exert some political pressure” on the Reserve Bank to hold back on a rate hike next week, saying the central bank’s independence “should be protected and cherished at all costs”.

The comments at a press conference on Friday morning came after the country’s longest serving treasurer, Peter Costello, told The Australian that the RBA was “out of touch”, and that it should have moved sooner to tame inflation, which hit a 21-year high over the year to March.

Ahead of Tuesday’s RBA board meeting which is expected to deliver the first rate increase in over a decade, Dr Chalmers said “it could have been the easiest thing in the world for me in the last two days to make political commentary about the work of the Reserve Bank, and I haven’t done that, because I think that the Reserve Bank should make its decisions free from political interference, from current and former treasurers”.

The Treasurer on Thursday said monetary policy was “the remit of the independent board of the Reserve Bank”.

“I can only point you to previous statements that they have made, where they have said they want to see inflation sustainably within their band,” Mr Frydenberg said. “And they also want to see significant wages growth before they start to move,” he said, a threshold which is far from being met.

Standing outside a grocer in Homebush in Sydney, Dr Chalmers on Friday also accused Prime Minister Scott Morrison of “washing his hands” of cost-of-living pressures, which have emerged as the No.1 economic issue in the campaign.

“They want to talk about international comparisons – Australians couldn’t give a stuff what inflation is in the United States,” he said. “On every shelf in every shop in every suburb is a reminder of Scott Morrison’s cost-of-living crisis.”

Speaking from the marginal seat of Bass in northern Tasmania, Mr Morrison said some things were out of the government’s control.

“You can’t necessarily change the price of a lettuce, but what you can do is you can halve petrol tax, and that’s exactly what we did,” the Prime Minister said. “You can make a $250 payment directly to pensioners and others on fixed-income support to help them with those costs, which we did. You can provide $420 – or not provide – enabling Australians to keep $420 of their own hard-earned dollars by providing that one-off tax relief, which we’re doing on July 1. They’re the things you can do to help people dealing with those cost-of-living pressures,” he said.

The political war of words came as Citi chief economist Josh Williamson said “there is a greater need to hike (rates) into the 2022 election than there was to hike into the November 2007 election” – when former RBA governor Glenn Stevens enraged then-PM John Howard by moving just before the poll.

Mr Williamson is part of the broad consensus among bank economists that the RBA will deliver the first rate hike in over a decade in a few days time, with a move from 0.1 per cent to 0.25 per cent anticipated at the May board meeting, followed by a move to 0.5 per cent in June.