Australian Treasurer Jim Chalmers called the US-Iran war an economic disaster, blaming it for higher global inflation and interest rates. He said rising bond yields will add billions of dollars to the cost of servicing public debt, but he does not expect a recession at home.
Australia's treasurer says the Iran war is a disaster for the economy, with the bill arriving through petrol prices, interest rates and the cost of the nation's debt. Jim Chalmers described the US war with Iran as an economic disaster, blaming the conflict for driving up inflation and borrowing costs around the world and warning that it is also dragging on global growth.
Rates, spending and a mid-year savings package
Speaking on ABC television on Sunday, Chalmers said the war's economic impact had been disastrous for the cost of living in Australia and globally, adding that it was pushing substantial upward pressure on inflation. Asked whether President Trump should end the war, he declined to offer advice but said an end could not come soon enough, warning that the longer it lasted, the greater the damage to the global and Australian economies.
The treasurer was also pressed on whether government spending had contributed to above-target inflation. The Reserve Bank of Australia has lifted interest rates to a 15-year high, citing both conflict-driven energy costs and domestic capacity pressures. Chalmers said spending growth had slowed and that budget settings were not the main driver of prices.
He flagged that a savings package would be included in the mid-year budget update, but cautioned that rising global bond yields would add billions of dollars to the cost of servicing public debt. He said pressure on budgets in Australia and elsewhere was intensifying, and it was unclear how the savings would net out against higher borrowing costs.
No recession expected, Japan visit planned
Chalmers said he did not expect a recession in Australia but acknowledged the war was weighing on global growth and that the country was not immune. He also announced plans to travel to Japan to meet Finance Minister Satsuki Katayama, as well as business leaders and investors, saying the two countries faced similar pressures from higher energy prices and bond yields and that the visit would focus on investment, fuel security and closer ties.
Source: Investinglive
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