The RBA governor says it’s too early to claim victory on inflation, despite being aware of the unpopularity of continuously tightening the cash rate.
Speaking before the Senate on Wednesday, Phillip Lowe said acknowledged the impact inflation had on the economy and Australians.
Stay up-to-date on the latest news with The National Briefing – keeping you in the loop with news as it hits:
Mr Lowe said “We are not going to declare victory until victory is achieved”, which is for inflation to return to its two to three per cent target.
That’s not forecasted until at least mid-2025.
“I know higher interest rates are unpopular, they’re hurting people, it’s very tough,” he said.
“Every single family is feeling those cost-of-living pressures, and that’s because over the past year prices went up seven per cent and we have got to stop that.
“I know what we’re doing is painful and it’s very difficult for many people bit it’s necessary.”
Mr Lowe said unless inflation was contained, an “inflation mentality” could have been adopted by Australians which could have become costly.
“The end result [if inflation was not controlled] would be higher interest rates, more pain and higher unemployment,” he said.
“It’s not a scare campaign, but we want people to understand its serious.”
The RBA has lifted the cash rate at 11 of its past 12 meetings; soaring from 0.1 per cent to 3.8 per cent in the tightest cycle since the 1980s.
The inflation rate sits currently at 7 per cent, down from its 7.8 per cent peak reached in the December quarter.
Subscribe to The Briefing, Australia’s fastest-growing news podcast on Listnr today. The Briefing serves up the latest news headlines and a deep dive into a topic affecting you. All in under 20 minutes.