“It’s a fine line between pleasure and pain”
Divinyls

Treasurer Jim Chalmers has walked a political tightrope across the canyons of fiscal repair, short term cost of living assistance & a snail’s pace growth in real government spending which will all help push inflation lower to unfurl a carpet bag of serious steps towards fairness via a medley of tax policy changes.
In the forecasts by Treasury that underpin the budget, there are significant differences from the forecasts released by the RBA just last week.
The RBA, somewhat recklessly, timed its May board meeting appallingly. At that meeting, it had limited if any knowledge of what are critical and economy-important policies in the budget. The Treasury forecasts, which will almost certainly be superior to the already obsolete and pale efforts of the RBA, incorporated the budget decisions and are therefore suggestive of economic growth being more resilient, for inflation to be lower sooner, and the unemployment rate to be lower.
I wonder if Treasury Secretary Jenny Wilkinson, who would have known the thrust of the budget settings when the RBA met last week, was the dissenting voice in the 8 to 1 vote to hike interest rates?
Kudos to her if she was, and a brickbat to the RBA for not only the timing of the meeting but for not listening to the all important themes that the government was set to deliver.
Suffice to say, in the budget there is a tightening in fiscal policy, plus a raft of reforms that will add to the productivity recovery already underway. As a result, Treasury is seeing a lower inflation climate than the RBA in both the short and the medium term.
Oh, and net migration is targeted to fall to just 225,000, further easing pressure on housing and wages.
While global events remain mercurial, this budget should deliver a big prick to the inflation outlook and as a result, see the market gradually adjust to a glide-path of steady monetary policy for a few months at least.