During the pandemic the RBA took the official cash rate to a record low 0.1%. This helped avoid long-term scarring, Governor Philip Lowe said, but 'contributed to the inflationary pressures we are now experiencing” rachelclun
Early predictions forecast tens of thousands of people would die, hospitals would overflow and jobs would be slashed which would lead to “deep social and economic scarring”, he said.
“I recognise though that while this approach meant we avoided some damaging long-term scarring, it has contributed to the inflationary pressures we are now experiencing.” Australia’s last inflation figure was 5.1 per cent - lower than elsewhere but higher than the Reserve Bank expected, Lowe said. He said new inflation data will be published next week and will be higher and will step up again before the end of the year.“The policy challenge for the RBA is to return inflation to the 2–3 per cent target range while, at the same time, keeping the economy on an even keel,” he said.
Lowe said there are signs supply chain issues will resolve in coming months, and the prices of goods and commodities including wood, semiconductors, oil and wheat are already coming down.
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