His comments come amid speculation of a rift between the federal government and the RBA, particularly regarding increased public spending.

Chalmers has publicly disagreed with RBA Governor Michele Bullock, who claims the economy is performing well, highlighting the tension between the two.

Under pressure to outline a clear economic agenda, Chalmers is focused on revitalizing growth while managing inflation ahead of the next election.

The government hopes to campaign in an environment of falling interest rates, although current signs indicate no reductions this year.

Bullock has taken a cautious approach, avoiding drastic rate hikes to prevent a deeper economic downturn.

Despite expectations from executives of Australia's big four banks that interest rates will soon decrease, Bullock has warned against premature optimism.

While acknowledging the negative impact of high interest rates, Chalmers also recognizes their necessity in combating inflation.

Treasurer Jim Chalmers has expressed significant concern over the damaging effects of high interest rates on the Australian economy, stating that they are 'smashing the economy.'

Chalmers criticized the Reserve Bank of Australia (RBA) for its aggressive rate hikes, which he believes are severely hindering economic growth.

Since May 2022, the RBA has raised interest rates 13 times, contributing to a slowdown in economic growth, with recent data indicating a mere 0.1% growth for the three months ending June 30.

Chalmers is attempting to shift public blame for economic issues towards the RBA, as households express frustration over rising prices and interest rates.

Critics, including Shadow Treasurer Angus Taylor, accuse Chalmers of avoiding responsibility for economic challenges and seeking excuses for failures.