Budget won?t rid economy of inflationary pressures

Staff Reporter Wednesday, 14 May 2008 1 minute read

The Rudd Government’s budget delivered overnight is not expected to completely dampen inflationary pressures in the economy.

Delivering a record surplus of $21.7 billion, the Rudd Government said the 2008 budget would bring some well needed cooling to the economy. It anticipates inflationary pressures to ease, forecasting a CPI of 3.25 per cent by June 2009 – well below the current 4.2 per cent.

However speaking this morning at an analysis of the budget, Macquarie Bank chief economist Richard Gibbs, said the budget was “benign” and that the risk of another interest rate rise remained a “clear and present danger”.

While he said the budgetary measures would keep inflation in check if realised, a number of factors – including how consumers take to their tax cuts – could impede this realisation.

Published: 15-05-08

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