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Treasurer warns rising global yields will pressure Australia’s federal budget

Jim Chalmers said he will deliver a budget update before year end, highlighting higher debt-servicing costs as “tomorrow’s expensive” budget problem.

Reported · Written up by our desk · Economy

Australia’s Treasurer Jim Chalmers warned that surging global bond yields will pressure the federal budget as low-cost government debt is refinanced at higher rates, according to Forexlive. He said he plans to update the budget before year end while emphasizing that the private sector is leading growth.

Chalmers linked the outlook to rising debt-servicing costs, saying a larger servicing bill could worsen supply concerns for Australian government bonds if deficits widen, which would keep upward pressure on longer-dated yields. He also pointed to the Australian yield curve facing pressure from both ends with the Reserve Bank of Australia in a hiking cycle and global yields at multi-decade highs.

Forexlive reports Chalmers added that oil-driven inflation is a key risk, noting that further energy price gains could push global yields higher and deepen the refinancing problem. He described the global bond market sell-off as reaching Canberra, framing yesterday’s cheap debt as becoming a more expensive budget issue.

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