In an interview, RBA Governor Philip Lowe said, “Australians need to prepare for higher interest rates”. He expects inflation to get to 7% by the end of the year, and “we need to be able to chart a course back to 2 to 3 per cent inflation”.
Lowe said, “it’s reasonable that the cash rate gets to 2½ per cent at some point… How fast we get to 2½ per cent, and indeed whether we get to 2½ per cent, is going to be determined by events.”
He expects inflation to peak at around 7% in the December quarter this year. Inflation will “clearly be coming down” into the second half of next year.
