Reserve Bank Governor Philip Lowe has apologised to Australians for giving them unclear guidance that led to hundreds of thousands taking out big mortgages in the expectation that interest rates would stay low until 2024.
He said the central bank did not know at that time the Omicron wave of COVID-19 would not be as severe as the Delta wave, and that inflation would pick up so quickly towards the end of last year and this year.
"You know, we're talking about 15 per cent unemployment, a generation of young kids not being able to find jobs, people not being able to go to school and university." He said the financial market expects the Reserve Bank's series of interest rate hikes mean that it can get inflation within its target band of 2 to 3 per cent.Dr Lowe said while real wages were going backwards the central bank was hoping that there would not be a massive spike in pay for workers.
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