Reserve Bank of Australia chief Philip Lowe said the coronavirus is having a 'significant'effect' on the country's economy
Reserve Bank of Australia chief Philip Lowe said the coronavirus is having a 'significant'effect' on the country's economy

Treasurer Jim Chalmers has accused the recent interest rate hikes of affecting Australia's economy, while warning that the upcoming growth data, scheduled to be released Wednesday, might be on the weaker side.

In a scathing attack on the Reserve Bank of Australia (RBA), Chalmers said it was "smashing" the economy with rapid interest rate hikes. Chalmers warned that the bank's conduct was causing irreversible damage to household budgets and slowing down the economy, ABC reported.

The treasurer's remarks on Sunday followed weeks of rumors regarding tensions between the RBA and the government, sparking concerns about the economy's direction. With new GDP figures set to be released on Wednesday, forecast shows a sluggish 0.2% growth in the June quarter.

"With all this global uncertainty on top of the impact of rate rises which are smashing the economy it would be no surprise at all if the national accounts on Wednesday show growth is soft and subdued," Chalmers said.

He suggested the RBA align its goals with the government's objective of taming inflation without crippling economic growth.

"We have different responsibilities to the Reserve Bank but the same objective, to get on top of inflation without hammering an economy which is already very soft," Chalmers said, per 9 News. "We are working well with the independent Reserve Bank and making progress on inflation which has halved since it peaked in the year we came to office. The Liberals and Nationals want higher interest rates because they think the more people are hurting the more it will help them politically."

The government is now facing the additional responsibility to immunize the already struggling households from further financial strain and cool off the lasting influence of inflation. Attributing the slower economic growth to global economic uncertainty, Chalmers noted that subdued growth in the upcoming national accounts was to be expected given the current financial pressures.