Jim Chalmers, Australia's Treasurer, announced that Australia's budget deficit at the end of the 2025-2026 fiscal year, which ended on 30 June, stood at A$22.3 billion, or US$15.7 billion, equal to 0.8% of gross domestic product. The figure was A$6 billion, or about US$4.2 billion, below earlier forecasts, and lower than the 2026-2027 budget draft Chalmers presented in May, which projected a deficit of A$28.3 billion, or about US$19.9 billion, equal to 1.0% of GDP. Chalmers said the improved fiscal position resulted from higher investment income combined with government spending that came in below what the Treasury had forecast. The disclosure came as the Reserve Bank of Australia's monetary policy committee began a two-day meeting, with the four major banks in agreement that the policy rate will be raised from 4.35% to 4.6%, which would be the highest level since November 2011. Chalmers said inflation is mainly driven by conflict in the Middle East, not by government spending.
RBA expected to raise the policy rate from 4.35% to 4.6%, pushing the 10-year Australian government bond yield up (price down).
