Treasurer defends government spending ahead of expected rates hike

Ahead of today's expected interest rates hike, Treasurer Jim Chalmers has insisted government spending is not behind Australia's stubbornly high inflation.

Millions of mortgage holders are bracing for a blow to their finances today, with the Reserve Bank of Australia tipped to raise interest rates.

Economists and the big four banks have forecast the central bank at 2.30pm will announce a 0.25 percentage point hike in the cash rate to 3.85 per cent when its two-day meeting ends.

READ MORE: Rate hike would reduce home buyers' budgets by thousands

Chalmers told Today this morning federal government spending spurges were not behind the country's high cost of living.

"All of these are serious issues, but some of them are temporary, and they're not fundamentally about government spending," Chalmers said.

The treasurer said the "big story" of the Australian economy last year was private spending surging ahead of public spending, but there was more work to do in bringing down inflation.

"We made a lot of progress the last few years, but we know that there's still pressure there, why it's a big focus of government."

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Business leaders in Australia have called for the Albanese government to rein in public spending by $50 billion to help fight inflation, reports The Australian Financial Review.

In its pre-budget submission to Treasury, the Australian Chamber of Commerce and Industry is calling for major cuts in government programmes, such as the National Disability Insurance Scheme, childcare, aged care, health and defence.

Prospective homeowners are set to see their purchasing power slashed by thousands of dollars overnight if the forecast rate hike goes ahead.

The maximum amount a person earning the average Australian wage of $104,807 can borrow from the bank will fall by around $12,000 from today, if the RBA hikes interest rates by 0.25 percentage points, new analysis by Canstar reveals.

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