Policymakers in Australia have successfully managed to control inflation while not substantially hindering domestic activity, positioning the economy for a soft landing, according to Treasurer Jim Chalmers.

“We’re getting that inflation rate down without ignoring the risks to growth, which are coming at us from an uncertain global environment and from some domestic sources as well,” Chalmers told Bloomberg Television’s Sonali Basak during an interview on Thursday.

He stated that the country has made “quite extraordinary progress” in alleviating price pressures, speaking on the sidelines of the International Monetary Fund and World Bank annual meetings.

The IMF has indicated that Australia will need to reduce fiscal spending if disinflation efforts falter, as policymakers face challenges in bringing price growth back within the Reserve Bank of Australia's target range of 2%-3%.

The Treasurer also highlighted the consecutive budget surpluses achieved by the centre-left Labour government led by Anthony Albanese to demonstrate fiscal restraint, Bloomberg reports.

With an election set to take place by May, Labour is facing challenges in opinion polls as voters express frustration over persistent price pressures. Meanwhile, the central bank has maintained its key interest rate at a 12-year high of 4.35%, diverging from a global trend toward easing as it confronts ongoing inflation issues.

The central bank has postponed its timeline for core inflation to reach the midpoint of its target to after 2026, and a prolonged period of strong hiring has led traders to reduce expectations for the RBA's first rate cut. 

Economic growth in Australia has slowed to a near standstill due to high borrowing costs, yet unemployment remains historically low, and house prices are on the rise.  The government is set to release Q3 inflation figures on 29 October.

“Some countries that have lower headline inflation than Australia have got much higher unemployment, or they’ve weaker growth, or some other combination of undesirable aspects of the economy,” Chalmers said.