Inflation remains public enemy number one as the treasurer expects the US central bank to keep hiking rates aggressively in response to a higher-than-expected inflation print.
Jim Chalmers says high inflation is still hammering the global economy.
“The Americans got a number today for inflation which was much higher than what they were anticipating, and that means that the US Federal Reserve, which is already taking action, will take more action,” he told the Nine’s Today Show from Washington, DC.
“Public enemy number one is this inflation we’re all facing.”
Core US inflation lifted higher than expected by markets and hit a 40-year high of 6.6 per cent year on year in September, making another 75 basis point rate hike by the Federal Reserve more likely.
Dr Chalmers has previously warned that the widening gap between US interest rates and Australian interest rates risks putting downward pressure on the Australian dollar, which makes imports more expensive and contributes to inflation.
On ABC’s 7:30he said a recession was not expected in Australia but headwinds in the global economy would have consequences for the nation.
“This is actually the steepest synchronised tightening of monetary policy that we’ve seen in the inflation targeting era. That obviously has consequences.
“Not just for inflation but for growth and unemployment as well.”
Dr Chalmers is in Washington meeting the head of the US central bank, IMF and World Bank bosses, and finance ministers from other nations ahead of his first budget on October 25.
Despite the gloomy global outlook, Australian consumers are stressing less about their finances due to the red-hot labour market.
The NAB consumer stress index dipped to 55.2 points in the September quarter from 56.1 in the quarter before.
Cost of living stress, unsurprisingly, has surged to its highest point since 2018 but was offset by consumers feeling confident about their job security, which is at near four-year lows.
Households are also exhibiting falling stress about government policy.