To the extent that tax cuts put more money in consumer pockets they will increase demand and add to inflationary pressure.
JP Morgan made a similar point:
- fiscal policy should be supportive, tax cuts coming which will “therefore be a tailwind for growth (and inflation), allowing the economy to sustain higher interest rates than previously”
Australian PM Albanese
This article was written by Eamonn Sheridan at www.forexlive.com. Source