Today the independent Reserve Bank Monetary Policy Board increased the cash rate by 25 basis points.
This will be difficult news for millions of Australians with a mortgage and we understand the pressure that this will put on families and businesses.
While today's decision was widely expected, that doesn't make it any easier.
We know many Australians are doing it tough which is why we continue to roll out responsible cost of living relief, including a further tax cut later this year and another one next year.
At the same time we're doing what we can to strengthen the budget and address our longstanding productivity challenge.
Our mid‑year update showed the budget is more than $233 billion better than we inherited and we've found more than $114 billion in savings since coming to office, including $20 billion in last year's mid‑year update.
It's the only mid‑year update on record that has delivered a better bottom line every year of the forward estimates, less debt in every year of the forward estimates and net policy decisions that improved the bottom line.
The Board's statement today does not mention government spending. It makes it very clear the pressure on inflation is coming from private demand.
In the Statement on Monetary Policy, the RBA upgraded their near‑term outlook for GDP and said that this was due to stronger private demand.
They stated: "The near‑term upward revision is driven by private demand," and the "contribution of public demand to year‑ended GDP growth has continued to ease in recent quarters, as expected."
In the year to September, annual private demand growth lifted more than five‑fold. At the same time, annual public demand growth was less than a third of what it was in the prior year.
Inflation has moderated significantly from its peak, but it is higher than we would like.
This reflects a mix of both temporary and persistent factors, including the end of energy rebates and a rise in travel costs that we know go up around Christmas time.
When we came to office, inflation was 6.1 per cent and rapidly rising, it's now much lower than that. Underlying inflation was almost five per cent, it's now also much lower.
We recognise people are still under pressure, which is why we're continuing to roll out responsible cost of living relief including tax cuts for every taxpayer, slashing student debt, cheaper medicines and more bulk billing.
The Albanese Government's three main economic priorities are addressing inflation, productivity and global uncertainty and today's decision highlights why this is so important.
