S&P Global Ratings may downgrade Australia's credit rating due to election promises

S&P Global Ratings has warned of a possible downgrade of Australia's credit rating. Earlier, the country's major political parties made election promises that could lead to increased government spending, a structural budget deficit, and higher government debt. These create risks for maintaining the current AAA rating.

Additionally, analysts at S&P Global Ratings expect more than 100 billion Australian dollars ($64 billion) of "off-budget" spending in the coming fiscal years. This could also negatively impact the government's financial stability. Currently, investors are not overly concerned about Australia's rising fiscal spending. However, analysts polled by Bloomberg warn that this increase could complicate the country's central bank's monetary policy decisions amid deteriorating global economic prospects.

The next Reserve Bank of Australia meeting will be held May 19–20. Interest rates are expected to be cut by a quarter percentage point, reaching 3.85%. By December, markets are forecasting a cut below 3%, compared to the 3.35% assumed by economists.