If the Reserve Bank cuts the official cash rate next month, as expected, it will show the Rudd government got its first budget spot on, Finance Minister Lindsay Tanner says.
The Reserve Bank of Australia last week indicated it saw a need for quick action to cut interest rates to prevent a deep and persistent downturn in the economy.
Mr Tanner says the $22 billion budget surplus is a crucial factor in the Reserve being able to consider cutting interest rates, but he denies there's a risk it will slow the economy too much.
"One of the reasons why it's possible the Reserve Bank may reduce interest rates in a week or two is because the budget is very strong, because the surplus is very substantial," Mr Tanner told Network Ten.
"That puts downward pressure on inflation and interest rates."
The finance minister said if the budget was in the same position as when the former Howard government left office "there'd be no way known the Reserve Bank would be able to contemplate putting down interest rates again".
"Inflation would be galloping along even higher," he said.
Mr Tanner denied the budget went too far and risked stifling growth.
"We do need a strong surplus still," he said.
"I don't believe the economy is slowing dramatically.
"It's slowing somewhat but the Reserve Bank is still predicting economic growth to be in the order of two per cent."
Meanwhile Opposition leader Brendan Nelson has called on the Rudd government to urgently release up-to-date details of the state of the economy.
Dr Nelson said Australians need to know what the current state the economy was in the international environment.
"It is not a political statement, it is a statement which reflects the gravity of economic circumstances in which the country finds itself.
"Most importantly, what are the governments specific policy prescriptions to address the challenges that this country now faces?"
