The Morrison government has seized on a warning from ratings agency S&P Global not to eat into the budget surplus even as financial markets expect the Reserve Bank to slash interest rates and engage in "unconventional" monetary policies to boost the economy.

Prime Minister Scott Morrison said the ratings agency, which said extra spending that hit the surplus may cost the country its AAA credit rating, vindicated the government's policy settings in the face of demands for federal stimulus.

Scott Morrison says a warning from ratings' agency S&P Global not to spend down the budget surplus vindicates the government's fiscal policies. Credit:Alex Ellinghausen

The government has faced a series of calls for it to do more to help the economy, which is growing at its slowest rate since the global financial crisis with inflation stuck well short of the Reserve Bank's target band and wages growth expected to remain subdued for the next two years.

The government is forecasting a budget surplus of $7.1 billion for 2019-20 which would be the first budget surplus since 2007-08. The mid-year budget update, due next month, is expected to show a slight downgrade due to extra spending in areas such as drought and aged care.