The federal government continues to reject claims the latest hike in interest rates was partially driven by its decision to back wage rises for low-paid workers.
The Reserve Bank of Australia on Tuesday hiked the key cash interest rate to 4.1 per cent in another blow for mortgage holders.
The hike marks the 12th increase since May last year when the central bank first started jacking up interest rates.
Asked if the RBA delivered the increase because government-backed wage rises risk driving high inflation, cabinet minister Clare O’Neil said that was absolutely not the case.
“It’s (the rate decision) not a government decision,” the Home Affairs minister told Seven’s Sunrise on Wednesday, adding she knows families are doing it tough.
“What I want them to know is that the Albanese government is doing everything within our power to make sure we can provide as much cost-of-living relief as we can.”
Opposition finance spokeswoman Jane Hume said in terms of the economy, the government had one foot on the accelerator while the RBA had one foot on the brake.
“The RBA governor said that without corresponding productivity gains, those wage rises will simply be more inflationary and we can expect further interest rate rises,” she said.
“Of course they will be forced to raise rates again.”
Economic growth data for the March quarter will be released on Wednesday.
Based on the string of clues revealed by the Australian Bureau of Statistics in the lead-up to the report, ANZ economists are anticipating a 0.4 per cent lift across the quarter and a 2.5 per cent annual rise in gross domestic product.
Senior economist Felicity Emmett said the various inputs into the GDP figure released in the past few weeks were strong enough to bump up forecasts from an earlier prediction of 0.2 per cent quarterly growth.
“A 0.4 per cent gain for the quarter would be a touch lower than the 0.5 per cent recorded in the December quarter and suggest economic momentum continues to slow in response to monetary tightening,” Ms Emmett said.
Wages and productivity indicators contained in the growth report would also be watched carefully considering the RBA’s concern about unit labour costs, she said.
RBA governor Philip Lowe will likely flesh out the bank’s case for lifting interest rates in June and signal the central bank’s outlook when he delivers a speech at the Morgan Stanley Australia Summit in Sydney on Wednesday.
The 25 basis point hike on Tuesday leaves the cash rate at its highest level since April 2012.
The governor has not ruled out further tightening but the trajectory for interest rates will depend on how the economy and inflation evolve.
Deputy Governor Michele Bullock is also expected to appear on a panel at the Australian Banking Association Annual Conference in Sydney.
By Poppy Johnston in Canberra
