Reserve Bank governor Philip Lowe says he will keep lifting interest rates but the pace will soon slow down and he is confident the economy can absorb the rises.
While Mr Lowe repeated recent statements hinting strongly that the pace of interest rate increases would soon slow from 0.5 of a percentage point each month, he emphasised that the cash rate had further to rise from the current level.
“[At] 2.35 [per cent], I think the rate is still too low,” Mr Lowe told the House of Representatives Standing Committee on Economics in Canberra.
He added that, over the longer term, the cash rate “should at least average the mid point of the inflation target”, which is 2.5 per cent, if not higher.
Mr Lowe said that an average interest rate of about 3 per cent was “possible”.
“I think we’ll cycle around some number between 2.5 and 3.5 [per cent],” he said.
Global recession threat
However, he is concerned the flagged large rate increases in the United States will push the US into recession, because that will make it harder for Australia to avoid a serious downturn.
“The outlook for the global economy next year is quite weak,” he said.
“And if it weakens further from our current forecast, it’ll be difficult for us to navigate this narrow path of getting inflation down while having our economy continue to grow reasonably well.”
Mr Lowe said the situation in the United States economy was very different to Australia’s.
He said the US Federal Reserve wanted to slow the US economy down because wages were growing at an annual pace of 6 per cent over there and it was making it very difficult to bring inflation down.
He said inflation was much higher in the US than it was in Australia, and the US Fed wanted to make interest rates deliberately restrictive to prevent a wage-price spiral occurring.
But that could have repercussions for Australia, he warned, because if the world’s largest economy fell into recession it would impact the growth rate of the global economy.
The World Bank has warned that there is a real and rising risk of a global recession amid soaring inflation and interest rates.
World Latest News Update
I have tried to give all kinds of news to all of you latest news today 2022 through this website and you are going to like all this news very much because all the news we always give in this news is always there. It is on trending topic and whatever the latest news was
it was always our effort to reach you that you keep getting the Electricity News, Degree News, Donate News, Bitcoin News, Trading News, Real Estate News, Gaming News, Trending News, Digital Marketing, Telecom News, Beauty News, Banking News, Travel News, Health News, Cryptocurrency News, Claim News latest news and you always keep getting the information of news through us for free and also tell you people. Give that whatever information related to other types of news will be
World Live News
You will like the news that I have created and shared with you all very much. We will continue to include themes for you to read about so that you may learn about hot news topics, which is what we hope you will be able to do.all kinds of news without going through us so that we can reach you the latest and best news for free so that you can move ahead further by getting the information of that news together with you. Later on, we will continue
to give information about more today world news update types of latest news through posts on our website so that you always keep moving forward in that news and whatever kind of information will be there, it will definitely be conveyed to you people.
World News Today
All this news that I have brought up to you or will be the most different and best news that you people are not going to get anywhere, along with the information Trending News, Breaking News, Health News, Science News, Sports News, Entertainment News, Technology News, Business News, World News of this made available to all of you so that you are always connected with the news, stay ahead in the matter and keep getting today news all types of news for free till today so that you can get the news by getting it. Always take two steps forward
Credit Goes To News Website – This Original Content Owner News Website . This Is Not My Content So If You Want To Read Original Content You Can Follow Below Links
Get Original Links Here🡽