RBA boss Phillip Lowe refuses to declare inflation ‘victory’ during Senate estimates hearing
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RBA Governor Philip Lowe faced a grilling at a Senates estimate hearing this morning, refusing to declare victory over inflation and flagging more cost-of-living pain for Australians.

Lowe said the battle against inflation is far from over.

RBA Governor Philip Lowe during a Senate estimates hearing at Parliament House in Canberra on Wednesday 31 May 2023.
RBA Governor Philip Lowe during a Senate estimates hearing at Parliament House in Canberra on Wednesday 31 May 2023. (Alex Ellinghausen / Sydney)

“I will not declare victory until victory is achieved. So, we won’t be declaring victory,” he said.

The RBA has long flagged that the inflation rate needs to return to between 2 to 3 per cent, which the RBA expects to happen in mid-2025.

Lowe said weak productivity growth is an ongoing issue for the economy, and it’s posing issues for how the RBA manages inflation.

“There has been no increase in three years for productivity,” he said.

“That means unit labour cost growth is quite high … higher than wages growth of currently 3.75 per cent.

“It is a problem for the country and a problem for the inflation outlook.”

Lowe also spoke about the challenge of inflation persisting around the world, flagging it as one of the factors the RBA is looking at as it weighs up another rate rise next week.

For sale sign at house
The decision to to hike rates in May, after a brief pause in April, ultimately came down to fears of further inflation risks due to weak productivity growth as well as faster-than-expected rent increases. (9News)

It was the 11th interest rate hike since April 2022, with the nation’s cash rate now at the highest it has been since April 2012.

Lowe defended the hikes, saying they are “necessary”.

“I know higher interest rates are unpopular, they’re hurting people, it’s very tough,” he said.

“Every single family is feeling those cost-of-living pressures, and that’s because over the past year prices went up 7 per cent and we have got to stop that.

“I know what we’re doing is painful and it’s very difficult for many people but it’s necessary.”

Google data reveals where cost of living crisis bites most

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