RBA Governor Philip Lowe said the larger than expected 50bps hike at last meeting was driven by “additional information suggesting a further upward revision to an already high inflation forecast”.
He also emphasized, “as we chart our way back to 2 per cent to 3 per cent inflation, Australians should be prepared for more interest rate increases.”
“In the next month or so, we’ll be doing a full forecast update, but it’s going to be some years, I think, before inflation is back in the 2-3 per cent range, he added.
“I don’t see a recession on the horizon,” Lowe said. “If the last two years has taught us anything, it’s that you can’t rule anything out. But our fundamentals are strong, the position of the household sector is strong, and firms are wanting to hire people at record rates. It doesn’t feel like a precursor to a recession,” he said.