Key facts
- Rising global bond yields will add billions to Australia's federal budget.
- Australian government debt has surpassed $1 trillion.
- The Reserve Bank of Australia's cash rate is 4.6%, a 15-year high.
- Australia's underlying inflation rate is 3.6%.
- Australian government bond yields are near 5.4%.
Australian Treasurer Jim Chalmers has warned that rising global bond yields will significantly increase pressure on the federal budget, potentially adding billions of dollars due to higher borrowing costs. This comes as inflation remains elevated and competition for capital intensifies. The RBA recently raised its cash rate to a 15-year high of 4.6%, further straining government finances, which have already surpassed $1 trillion in debt. Chalmers indicated that the government is planning a new savings package for its mid-year budget update, but acknowledged that the final budget outcome remains uncertain due to fluctuations in borrowing costs. The US 10-year Treasury yield has reached levels not seen since 2002, while Australian government bond yields are hovering near 5.4%.