OPINION: Lowe is watching to see how households handle the triple whammy of rising food and energy costs, higher home loan repayments and falling house prices.
never subscribed to the view that, given time, inflationary pressures might ease of their own accord.
As a result, Lowe expects inflation to push higher in coming months, before it eases back towards a more comfortable 2 to 3 per cent range next year.And that’s why Lowe is taking a tough line on inflation. Not only did the Reserve Bank board raise its cash rate by a more-than-expected 50 basis points at its meeting on Tuesday, but Lowe signalled “further steps” were likely in coming months as the central bank moved to normalise its policy settings.
Now, on the face of it, households should not be rattled. A large cohort of home loan borrowers have accumulated impressive amounts in their mortgage offset accounts.
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