Analysis: Abandon all hope ye who believe the RBA has finished lifting rates | swrighteconomy
Reserve Bank governor Philip Lowe fears Australians could find themselves lost in one of Dante’s circles of hell - the one named inflation.
But before his crowd started to believe the bank was about to seek absolution for its past mis-deeds, Lowe effectively warned them to abandon all hope of financial relief: the RBA is not yet finished with rate rises.“It is a scourge. High inflation devalues your savings. It worsens inequality in our societyour economy,” he said.He went on to note that if the bank did not increase rates, as some have suggested they should not, the circles of hell would slowly constrict the country.
Despite the hefty increase in mortgage rates - equivalent to more than $1000 a month on an $800,000 mortgage since May - the bank has upwardly revised its inflation outlook.Yet, the RBA now reckons inflation will be around 4.75 per cent at the end of next year and “a little above” 3 per cent at the end of 2024.But Lowe also revised down the RBA’s outlook for economic growth. It was tipping growth to average 1.75 per cent over the next two years, but that now looks around 1.5 per cent.
As Lowe noted, the bank is trying to walk a difficult trail and “we could be knocked off that narrow path”.
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