RBA Governor Philip Lowe said in a Senate hearing, “I don’t think we’re at the peak (on interest rate) yet, but how far we have to go up I don’t know.” He noted that inflation, which is currently sitting at 7.8%, was still “wage too high”. Unemployment would need to rise before there were any major changes to inflation.
“I understand why some people focus on the risks on the one side, but we’ve got to be attentive to the risk from higher inflation,” Lowe warned. “It’s corrosive for the economy. And all the evidence is if inflation stays high for too long, expectations adjust and that leads to higher interest rates and more unemployment..”
“The risks are two sided, and we’re trying to navigate our way through a narrow path.”
