Reserve Bank of Australia Governor Philip Lowe warns of another rate hike ahead of Senate hearing in Canberra

Philip Lowe has warned the Reserve Bank against raising interest rates further because it has not done enough to control inflation.

The RBA governor said at a Senate hearing in Canberra that the ninth straight hike this month – which would take interest rates to a 10-year high of 3.35 percent – would be far from the last.

“There is a risk that we haven’t done enough on interest rates,” he said.

“If inflation gets worse, it will lead to higher inflation and higher unemployment, with devastating consequences.”

dr Lowe noted that unlike politicians, he could make unpopular decisions to fight inflation, which is at a 32-year level of 7.8 percent, to avoid a repeat of 1990, when wages failed to keep pace with inflation held.

“Unlike some of you, I find it easy to do unpopular things,” he said.

The board he chairs last Tuesday voted to raise interest rates for a ninth straight month to a new 10-year high of 3.35 percent, adding another $93 to an average mortgage of $600,000.

“I know it’s really hard for people to pay more on their mortgages, but it gets even harder when inflation goes up,” said Dr. Lion.

The typical Australian borrower with a 30-year loan is now paying 43 per cent, or $997, more per month on their adjustable home loan compared to early May last year.

Philip Lowe has warned the Reserve Bank against raising interest rates further because it has not done enough to control inflation

Her annual repayments are already $11,964 more than they were nine months ago, even though Dr. Lowe 2021 pledged to keep interest rates at a record low of 0.1 percent “at the earliest” until 2024.

dr Lowe suggested last Tuesday that the RBA would hike rates further in 2023 to deal with inflation at 7.8 percent, its highest level in 32 years and also well above its 2-3 target percent lies.

He stirred further controversy on Friday when he told bankers in a private briefing organized by Barrenjoey Capital that the RBA would take a hard line on inflation, which would lead to a sharp rise in bond yields.

But dr Lowe said it’s important to meet with people outside the Reserve Bank and hear from financial market players.

“I can’t live in a bubble,” he said.

“It is a long-standing practice to speak to market participants, companies, journalists, politicians and civil society.”