Westpac on Australian tax cuts impact on RBA policy – "already factored into the outlook"

<p>Chief Economist at Westpac, was up until recently a senior official at the Reserve Bank of Australia, Assistant Governor (Economic).</p><p>Ellis made available a detailed piece on the Australian government's tax cuts coming on July 1. It's a detailed article, thankfully there is s summary ;-)</p><ul><li>When policy changes are announced, focus on the big picture. Tax relief from July was already factored into the outlook. Changes at the margin do not change the overall story.</li></ul><p>A little more detail:</p><ul><li>remember that these tax cuts will not take place until 1 July. By that stage, inflation is likely to be within striking distance of the RBA’s 2–3% target. Any surprises around the effect of the tax package on household spending will only emerge after that. What matters for near-term monetary policy decisions is whether the RBA currently thinks that the outlook has changed, not whether things turn out differently once we get to that point. Media reports suggest that the RBA has already confirmed with the government that the tax changes do not affect the outlook.</li></ul><p>Here is the link for the full; piece:</p><ul><li><a href="https://www.westpaciq.com.au/economics/2024/01/lucis-note-25-jan-2024" target="_blank" rel="nofollow">The Octopus and the Big Picture on Tax</a></li></ul><p>—</p><p>I've been posting this frequently, the big changes for RBA meeting dates this year:</p>

This article was written by Eamonn Sheridan at www.forexlive.com.