Treasury is revising all the numbers for the mid-year budget update as economists warn of a difficult six months ahead

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Jim Chalmers has revealed December’s mid-year budget update will project weaker growth and higher unemployment, as economists warn of a difficult six months ahead for the Australian economy.

Two days after a senior Reserve Bank official foreshadowed the potential for another interest rate hike in under two weeks’ time, the treasurer in a speech on Friday morning will say “higher inflation is putting people under pressure, tighter monetary policy is weighing on domestic activity, and we can see that in the softening of the labour market”.

Andrew Hauser says central bank faces ‘hard choices’ as it looks to balance risks of entrenched inflation with desire to protect labour market

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The chance of a fifth interest rate hike on Melbourne Cup day has jumped after Andrew Hauser, the Reserve Bank’s deputy governor, warned of “hard choices” amid a “materially worse” inflation outlook.

Hauser, speaking at an investment bank conference in Sydney on Wednesday morning, said the RBA monetary policy board members were juggling a slowing economy with fears that Australians were starting to lose faith in the central bank’s ability to bring inflation back to the 2.5% target.