If you read the AFR, your mind will die:
Reserve Bank of Australia governor Michele Bullock has softened the bank’s previous warning that government spending is contributing to inflation and instead pointed to consumer spending, in a messaging shift that will help shore up relations with Treasurer Jim Chalmers.
Ms Bullock reiterated on Friday that it was “premature” to be thinking about cutting the RBA’s 4.35 per cent cash rate this year, but went out of her way to absolve the Albanese government of responsibility for persistent inflation.
Under questioning from Labor and Liberal MPs in Canberra, a conciliatory Ms Bullock said federal and state government spending was “not the main game” compared with bigger economic forces, including consumer spending that accounted for about 55 per cent of demand, housing construction, and international trade.
Riiight, except for the three, Bullock also said the major difference to other countries is construction costs.
She also said construction inflation is out of control due to tradie shortages and energy costs tipping into building materials.
While she didn’t say it was public demand crowding out, that is obvious.
And she reiterated that the bank would track core inflation, not headline, implicitly ignoring energy rebates.
In short, Bullock did not point the finger at Jim “Chicken” Chalmers but she described everything that he had done wrong:
- too much immigration stoking construction bottlenecks;
- the wrong kind of immigration with no tradies, and
- not enough fundamental energy reform stoking price shocks, and
- too many energy fiddles, which she won’t include in disinflation.
In short, Bullock drew a map directly to the door of Jim “Chicken” Chalmers, but the AFR can’t follow it.
