Reserve Bank governor Philip Lowe has a further chance to prepare Australians for an environment of high inflation and rising interest rates when he addresses a forum in Sydney.
In a rare TV interview last week, Dr Lowe said the central bank board will do what is necessary to bring inflation under control, warning the cash rate could reach 2.5 per cent but giving no time frame for such a move.
He told the ABC’s 7.30 program he now expects inflation to reach seven per cent by the end of the year, compared with a previous forecast of six per cent, and more than double the two to three per cent target.
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It compelled the RBA to lift the cash rate by a larger than expected 50 basis points at this month’s board meeting.
Dr Lowe’s small-screen appearance came more than a decade after former governor Glenn Stevens was interviewed on the Seven Network in the wake of the global financial crisis.
On Tuesday, the governor will deliver an address on the economic outlook and monetary policy at a Sydney event co-hosted by the American Chamber of Commerce In Australia, and ANZ.
The RBA will also release the minutes of its June board meeting, which may provide a further insight as to why the cash rate was raised by 50 basis points, the biggest rise since February 2000, rather than the expected 25 basis points.
Economists are predicting a further 50 basis point increase in July and possibly another in August, which would take the cash rate to 1.85 per cent, having been at a record low of 0.1 per cent a few months ago.
Consumer confidence has already taken a big hit, faced with rising inflation and interest rates.
The weekly ANZ-Roy Morgan consumer confidence index is also released on Tuesday.
Last week, the index – a pointer to future household spending – slumped 7.6 per cent to its lowest level since April 2020 and during the early stages of the COVID-19 recession.
The percentage of respondents who expect ‘good times’ for the economy over the next five years dropped to 10 per cent – its lowest level on record.
© AAP 2022