RBA Governor Dr Philip Lowe has reiterated the central bank's commitment to combatting inflation, with interest rates set to rise further.

However, the price of monetary policy tightening and battling inflation is a potential recession, as it takes demand out of the economy. 

Speaking at the annual Committee for Economic Development of Australia in Melbourne on Tuesday night, Dr Lowe highlighted the consequences of high inflation in the 1970s and 1980s to demonstrate the need for the RBA to take action.

"High inflation meant lower growth, fewer jobs and lower real wages," Dr Lowe said.

"Another lesson from these decades is that bringing inflation back down again after it becomes ingrained in people's expectations is very costly and almost certainly involves a recession."

He said that given the RBA's remit for price stability and full employment, the cash rate (currently at 2.85%) was expected to continue to rise to lower inflation.

"We understand that many people are finding the rise in interest rates difficult," Dr Lowe said.

"It is necessary, though, to ensure that the current period of higher inflation is only temporary ... if high inflation were to persist, all Australians would pay a heavy price.

"We have not ruled out returning to 50 basis point increases if that is necessary."

Dr Lowe did say that the RBA's forecast is for inflation to peak later this year at around 8%, before declining gradually to be just over 3% by the end of 2024.


This expectation is based on COVID supply disruptions being resolved, commodity prices stabilising, and global rises in interest rates slowing demand.

However, he warned that several global trends are likely to continue to cause more variability in inflation, such as the impact the increased frequency of extreme weather events has on the supply of goods.

Natural disaster trend.JPG

"It is not just food production that is affected by extreme weather. It also disrupts the production of commodities and the transport and logistics industries," Dr Lowe said.

He also said that the global transition towards green energy could result in higher and more volatile energy prices.


Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
Principal & Interest
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5.99% p.a.
5.90% p.a.
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6.09% p.a.
6.11% p.a.
Principal & Interest
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Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

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