The market reaction to the budget has so far been fairly limited. The dollar spiked overnight shortly after 4am AEST, but only to 80 US cents, keeping it within the range in which it has been trading for weeks.

Here is a round-up of economic analysis and insights from key market advisory firms and financial players.

AAA interest rating untouched, for now

Ratings agency Standard and Poor's said the budget's projected moderate budget deficit declines were unlikely to affect the country's credit rating.

"These deficits are somewhat larger than projected in the government's May 2014 budget and the December 2014 budget update, primarily reflecting further sharp falls in Australia's key export commodity prices and the flow-on impact on government revenues.

"Nonetheless, Australia's budget performance over the next few years appears likely to improve, underpinned by spending restraint. While weaker, these revised budget forecasts remain broadly consistent with our base-case assumptions that deficits will be moderate and declining. We continue to anticipate that net general government debt will remain low relative to GDP."

Fitch had already confirmed Australia's credit rating was safe before the budget. Moody's Investors Services confirmed shortly after its release that there would be no early impact.

"The measures and forecasts announced in Australia's budget today are in line with Moody's own expectations, which underpin our stable outlook."

Surprising downgrades to economic outlook

The team at Barclays said the budget was "surprisingly unaffected by conservative economic assumptions" and noted the projections included slower recovery to growth, wage growth and decreased income from lower terms of trade.

"After a bruising reception to last year's budget, the government opted for few changes in this year's budget and the forecast of a slow return to a small surplus was basically unchanged. We view the treasurer's second budget as a 'small target' policy document, where the government has sought to avoid a repeat of last year's budget, when a raft of savings measures that were largely aimed at households were rejected by the public as unfair and many of the proposals were ultimately rejected by the senate."

Aussie dollar boost to be temporary

The Australian dollar briefly jumped as high as 80 US cents after the release of the budget, but National Australia Bank senior currency strategist Emma Lawson expects it to only be a temporary lift, saying the Aussie jump could be attributed to the ratings downgrade not being realised."If this is the case, we would anticipate some pull-back today; that news doesn't tend to influence currencies for long."

Neutral impact but lingering issues

The National Australia Bank's chief economist, Alan Oster, described the market's response as "modest but nonetheless positive" as the dollar traded upwards, bond futures improved by up to three basis points and concerns were calmed about any immediate threat to Australia's AAA rating.

"Given the political problems of last year's Budget, much focus has been placed on attempting to make this Budget as politically saleable as possible," Mr Oster said. "Also, unlike last year, the Budget is relatively neutral in its impact on the broader economy. Essentially new expenditures have been broadly offset by savings.

"Of course the Budget is not the complete current fiscal story. There is still the Tax White Paper to come - the Budget had little on big tax and superannuation questions. Also there is still the debate about what happens to Government's removal of $80bn in state funding for health and education in the out years. And finally, despite the Government's best efforts, what happens in the ensuing political process is unknowable."

Good news for equities

Matt Sherwood, head of investment strategy for multi-assets at Perpetual, said the impact on bond markets was unlikely to be negative, but the small business spending and new tax measures were good news for shares.

"Sustained low interest rates and increased infrastructure and small business spending are positives, as it is likely to be a lift in business and consumer confidence, if it passed by the senate, but this remains the key risk," he said.

Domestic interest rates could be cut again

Paul Dales, chief economist for Australia and New Zealand at Capital Economics, said Joe Hockey had, in effect, washed his hands of the economy's woes by leaving the bulk of supporting growth for the Reserve Bank.

"We believe that the economic outlook is even weaker (than the budget's forward projections), which would be consistent with the cash deficit remaining higher for longer and net debt rising further than the Treasury expects," he said. "Even if the ratings agencies were to strip Australia of its AAA rating, which is unlikely, we still think that the dollar will weaken, bond yields will fall back and the RBA will cut interest rates below 2%" 

Delayed reform in a 'softer, cuddlier budget'

ANZ analysts welcomed what they called a "cuddlier" budget, saying any significant policy tightening would have damaged fragile household and business confidence.

But they said the government had passed the responsibility for exploring much-needed reforms to the Federation White Papers that are due next year.

"There are some worthwhile measures that may encourage higher workforce participation, such as the changes to child care arrangements and bonuses to employers hiring older workers," they said. "But the hard task of replacing bad taxes with more efficient ones and simplifying messy state-federal relations has been left for another day." 

Commendable to delay budget deficit reduction

Analysts at the Commonwealth Bank praised the decision to opt for a confidence-boosting budget, but raised concerns about stalled measures from last year.

"The Budget bottom line is also flattered by the inclusion of a number of earlier measures stuck in the Senate log jam," they said. "On our back‑of‑the envelope figuring, these stalled proposals are worth about $15bn over the next four years, including nearly $7bn of measures re‑tasked to pay for the new childcare proposals. Clearly Budget success will require some skilful negotiation to get these measures through the Senate."

The team at CommSec also described the gentler budget as the right note this year.

"There is less urgency on reducing the budget deficit in the short-term," they said. "And that is right and proper. Fiscal (budgetary) policy needs to support monetary policy in boosting economic momentum in the current environment. The budget deficit still needs to be reduced over time, but – like any business – the smart way is to focus on restraining costs at the same time as boosting revenues."

They are not expecting much impact on the Australian dollar.

Good news, limited impact, little long-term gain

Analysts at St George Bank said the budget was far from a solution, but a step in the right direction - if the promised numbers could be delivered.

"Realistically there is no budget crisis and no need to 'butcher' the economy in order to achieve a surplus. Arguably last year's attempt at rapid budget repair dented consumer and business confidence and held back economic activity."

St George economists Hans Kunnen, Josephine Horton and Janu Chan continued:

"The budget itself will likely have little impact on confidence apart from lifting the spirits of those beneficiaries of new spending and tax deductions. Equally it will disappoint those whose agendas have not been accepted."

Welcome earlier budget surplus, with a warning

JPMorgan described this year's budget as dull compared with last year's bold saving measures, but warned that recovering to surplus - now promised earlier than expected in 2019-20 - was always more complicated than expected.

"Indeed, the journey back to surplus looks simple on paper, but probably will not be an easy ride, given the steady headwinds the economy continues to face. The path back will be long and winding, and there will be bumps along the way, as the Treasurer learned this year as iron ore prices tumbled. Not least among the challenges from here, outside maintaining decent growth in the economy, will be getting the new measures passed through parliament, as well as some of the stale ones from last year."

Less confronting, but some slippage

Economists at investment bank UBS said fiscal consolidation would lead to modest slippage of a quarter of a percentage point of gross domestic product.

"To their credit, new spending is fully-funded," they said. "While this suggests savings could have been directed to a better fiscal path (or more 'reform' or more infrastructure), it's hard to argue the economy doesn't need modest additional support of less than ¼%pt of GDP. Of course, this means there's still much to do in the future, while the Senate remains a challenge and the forecasts appear to leave little room for error. But there's little to impact the RBA's thinking, or worry Australia's AAA rating in this budget."