Australian government pledges $10 billion in budget to ease cost of living

Anil Panchal FXStreet

Australia's centre-left Labor government said on Monday it would include A$14.6 billion ($9.84 billion) over four years in the federal budget for cost of living relief for families and businesses, which it promised would not stoke inflation.

The news also highlights the Reserve Bank of Australia’s (RBA) Friday’s warning that risks to inflation were on the upside given low productivity growth, rising energy prices and a surge in rents.

While conveying the hints for the Tuesday's federal budget, Treasurer Jim Chalmers said, “The centrepiece of the budget ... will be cost-of-living relief that doesn't add to inflation."

The policymaker also adds that people are under the pump. We've carefully calibrated and designed this Budget so that it takes pressure off the cost-of-living rather than add to it.

Additional details

Chalmers has repeatedly stated his budget would be restrained on spending so as not to add to inflationary pressures, while also giving some relief, after the Reserve Bank of Australia (RBA) last week stunned markets with a rate rise, defying trader expectations for an extended pause.

The latest relief measures come after the government set aside A$11.3 billion for wage rises for aged care workers over four years, while announcing an additional 5% tobacco tax and A$2.4 billion in more tax on oil and gas producers.

Australia's deficit is expected to shrink sharply, the budget is expected to show, as its coffers bulge with tax windfalls from commodity exports, yet the outlook will be a sober one as fiscal challenges loom.

Also read: AUD/USD aims to surpass 0.6750 as Fed to pause hiking rates despite solid US labor market

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

AUD/USD remains offered; supported by 0.7100

AUD/USD adds to Monday’s retracement, although it manages well to keep the trade above the 0.7100 yardstick ahead of the opening bell in Asia. Once again, the softer tone in spot follows decent gains in the Greenback amid rising bets for a Fed rate hike on Wednesday.

USD/JPY extends gains toward 155.00 amid USD resurgence

USD/JPY keeps pushing higher toward 155.00 early Tuesday, looking for more upside, as traders await the FOMC and BoJ meetings this week. Meanwhile, Fed rate-hike bets and oil-driven inflation risks keep US bond yields near multi-year highs, supporting the US Dollar and the pair. That said, a more hawkish repricing of the BoJ normalization path might continue to underpin the Japanese Yen and could limit USD/JPY's upside. .

Gold set to fall toward $4,000 as Warsh faces a Fed rate-hike dilemma

As the Federal Reserve monetary policy announcement approaches and the Middle East war intensifies, the US Dollar resumes its advance. Gold price posted a tepid attempt to recover its shine in early August, but with renewed USD demand, the bright metal faltered miserably and is now closer to the $4,000 mark than the encouraging $4,700 peak from a month ago.

Bitcoin pulls back as valuation ceilings hold while XAU weakness persists

Bitcoin (BTC) corrects alongside the broader cryptocurrency market on Tuesday as selling persists ahead of the United States (US) Federal Reserve (Fed) monetary policy decision. Market participants expect the central bank to raise interest rates to 3.75%-4.00% on Wednesday, potentially weighing on risk assets.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.