Reserve Bank Governor Philip Lowe has shot down suggestions rising inflation will result in cash rate increases next year.

The RBA chief used a policy speech to downplay the impact of inflation on the economy, declaring the current global inflation trends transitory.

The prices of goods and services are increasing with oil, petrol, cars, construction materials and shipping costs rising.

Retailers have also begun to offer fewer discounts, which, combined with the shortages and increased costs, have pushed up inflation to 2.1 per cent, but the RBA wants it closer to three per cent.

“We want to see underlying inflation well within the two to three per cent range and have a reasonable degree of confidence it will not fall back again,” Mr Lowe said.

Mr Lowe said the cash rate would not be increased until inflation is “sustainably in the target range,” and to do this, wages growth would have to be near three per cent and is currently at 1.7 per cent.

Mr Lowe believes the current inflation rate is due to the pandemic and the issues in the supply chain which occurred due to it.

Recommended Posts

No comment yet, add your voice below!

Add a Comment

Your email address will not be published. Required fields are marked *