Philip Lowe of the Reserve Bank signals 7 percent inflation, more interest rate hikes

“At each of our meetings we will decide how fast to go and indeed, how far to go,” he said.

The RBA had spent a lot of time looking at data to see how households were coping with the rate hikes, Lowe said, as banks passed the rate hike on to mortgage holders and food and gasoline prices also rose with inflation.

While the economy was generally resilient, with plenty of savings, he said the bank already knew some households were struggling.

“Ultimately, however, our responsibility is a national one: we want to ensure that inflation is low and stable, that the country is fully employed and that the country’s financial stability is maintained,” he said.

“Against that big picture… [we] understand that it is not easy for many people right now.”

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The RBA is also reviewing its response to the pandemic, which not only saw interest rates cut to record lows, but also spent more than $300 billion on a quantitative easing program in an effort to keep the money flowing through federal and state governments during the pandemic downturn.

In the dark early days of the pandemic, Lowe said there were credible forecasts that there would be tens of thousands of deaths, hospitals overrun and the unemployment rate soaring to 15 percent.

“We looked into the canyon which was very scary. We wanted to build a bridge to the other side,” Lowe said.

“My view is that by and large the country was right. We went through incredibly scary, harmful times. We have taken out many insurance policies. I think it was the right thing to do, but I accept that others will think differently.”

The RBA was determined to learn from his experience, he said, and looked at it through a series of assessments of its response to the pandemic, to be published in the coming months.

Cut through the hubbub of federal politics with news, opinions and expert analysis from Jacqueline Maley. Subscribers can sign up for our weekly Inside Politics newsletter here.

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