In its first appearance after the 50 basis point interest rate hike in June, Philip Lowethe governor ofl Reserve Bank of Australia (RBA) warned that Australians should be prepared for significant interest rate increases in the rest of this year.
The governor explained that the RBA would do “whatever it takes” to bring inflation back to between 2 and 3 percent. He said that at the moment it is not clear how much interest rates will have to rise.
“I’m sure the inflation it will come down over time, but we’re going to have to have higher interest rates to get that result,” Lowe said. He said it was “reasonable” to think that interest rates would reach around 2.5% at some point. level will depend on events.
On economy, the governor said that it did not evolve as expected, and that it has been much more resilient and inflation has been higher. “We’re not concerned that declines in house prices will affect the banking system,” he added.
Lowe expects the Australian economy to continue to grow quite strongly over the next six to twelve months.
The AUD/USD remains under pressure and just broke below 0.6900, marking new one-month lows.
Source: Fx Street
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