No inflation room for budget stimulus, say economists

Leading economists say next month’s federal budget must be contractionary and take money out of the economy, or at least not hinder the Reserve Bank’s inflation fight, lest it further delay interest rate cuts.

With inflation not forecast to return to the mid-point of the RBA’s 2 per cent to 3 per cent target band until 2026, more than a dozen top analysts have warned that Treasurer Jim Chalmers needs to adopt spending restraint.