Philip Lowe detailed why the Reserve Bank is intentionally not bringing down inflation quicker, as the latest data reveals an annual increase to 6.8 per cent.
The RBA is projecting inflation to fall to its target of between 2-3 per cent by the middle of 2025, which trails other central bank forecasts around the world.revealed annual inflation increased from 6.3 to 6.8 per centDriving that figure were increases in the prices of housing, fuel, food, and transport.
Appearing at Senate Estimates in Canberra, Mr Lowe said the RBA’s reasoning for taking a more conservative approach was because it did not want to undo any progress made within the labour market.“We finally got there courtesy of the policy response in the pandemic by both the government and the Reserve Bank.The Governor emphasised the RBA was “serious” about bringing down inflation but it wished to preserve the labour gains.
“We decided to pursue a course back to three per cent inflation but that’s a fairly balanced course and we don’t want to disrupt the labour market by more than we can,” he said. Inflation remains the biggest challenge in our economy and that's why it was the focus of the budget. As the Treasury Secretary confirmed in Senate Estimates this morning, our budget delivers cost-of-living relief while putting downward pressure on inflation
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