"You shouldn't believe for a moment that this budget will add to the pressure on interest rates," Mr Howard told ABC radio.
He said Reserve Bank governor Ian Macfarlane would not be surprised by anything in the budget.
"Mr Macfarlane has said a couple of things, he's said we could afford tax cuts, he made that very clear," Mr Howard said.
"He said of course that he wanted a strong surplus and we've delivered that….” He also said that the thing he was most worried about in relation to the surplus was sharp variations, unpredictably.
"This government has been a model of predictability. On those scores, we should not be concerned about upward pressure on interest rates."
Mr Howard said the tax cuts would help people cover the cost of increased petrol prices, and not put pressure on wages.
"(Mr Macfarlane) would understand that the pressure point on inflation, which in turn becomes the pressure point on interest rates, is wage inflation," he said.
"And if you are providing tax cuts to average wage earners, that reduces the pressure for unaffordable wage increases but doesn't deny wage increases based on productivity."
'No right to hoard'
Economic commentators have said the giveaways leave nothing aside for a rainy day.
But Mr Howard said the government had no right to hoard taxpayers' money when the surplus was so substantial.
"Well, we've got a future fund, that's the rainy day fund," Mr Howard later told Southern Cross Broadcasting.
"We've got a surplus of $10 billion and (we've) got surpluses going out right over the forward estimates representing one per cent of GDP. We've paid off all of our net debt.
"It reaches a point where if you don't give it back to the people who own it, and that's taxpayers, they're entitled to say 'well it's our money, what are you doing with it? You've got no right to hoard it, Mr Howard or Mr Costello'."
He said the criticisms would be valid if the surplus had been "a couple of hundred million and if we still had a substantial net debt".
Health and education
Mr Howard also defended the apparent lack of spending on health and education.
"We've made a lot of provision for those things outside of the budget," the prime minister said.
"Didn't I announce a $1.8 billion package for mental health six weeks ago? Haven't we announced separately from the budget additional amounts of Medicare? The budget is not the only vehicle for expenditure announcements.
"People still make this mistake of focusing only on the budget and saying if it's not in the budget, it hasn't happened." Mr Howard said the budget was sound.
"The fundamentals of the budget are anti-inflationary. We have a strong surplus. We're not doing anything that's going to add unduly to rates increases based on productivity.
"The Reserve Bank governor has said that he thought we could afford tax cuts. His concern, obviously, was that we should have a strong surplus and we didn't have sharp variations in that surplus from year to year.
Economic future
"Now, if you look at the budget, all of those things have been covered."
Mr Howard also said the budget would help secure Australia's future.
"I think it's a very good budget. It is a budget about the future," he told Southern Cross Broadcasting.
He said the superannuation changes provided simplicity and flexibility. "The superannuation changes are very good indeed, and they cut through a lot of the complexity and simplify the system.”
"People have been calling on governments for years to deliver a simpler system and in one stroke I believe we have a plan that does provide greater simplicity, that does encourage people to remain in the workforce, at least until they are 60, because the new benefits will cut in at age 60.
"We have too many people between 55 and 60 dropping out of the workforce."
Political future
Mr Howard would not speculate on his future as prime minister. When asked if last night's budget would be Mr Costello's last, he said: "Come on, next question".
He said his working relationship with Mr Costello was "absolutely terrific. We work together as a wonderful team. I just, how shall I put it, I'm well prepared and I don't sort of give anything away. You know my position about how long I will continue as prime minister and nothing has changed."