Before the budget, expectations of an actual surplus, and slight future deficits, came vaguely close to reality. Here’s what it was

…and the new numbers, closer to a 1% and 1.5%. So an extra 1-1.5% or so of “extra” spending as a % of GDP injected into the economy.

Most of it is a) tax cuts b) household subsidies c) things to help incentivise building.

The problem of course is that tax cuts and subsidies put more money into the pockets of consumers, and, that’s happening at time in which inflation is running above target and proving sticky.

So it is precisely not the time to do any of that. The amounts are not huge, but still, not ideal, any of it, and the RBA could easily use it as an excuse to tighten again.

Markets have not reacted overmuch; the budget leaks means the information gets priced into the market ahead of time, and that seems to have happened here. US CPI will be more impactful, at the margin, to be released overnight.

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