Philip Lowe conducted a rare television interview for a Reserve Bank governor last week, perhaps indicating the enormity of the challenges facing Australia in terms of inflation and interest rates.
The small-screen appearance on ABC’s 7:30 came more than a decade after former Governor Glenn Stevens was interviewed on the Seven Network in the wake of the global financial crisis.
Dr. Lowe warned that the central bank’s board will do whatever it takes to rein in inflation, which he now expects to hit 7 percent by the end of the year and more than double the 2-3 percent target.
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That is why the RBA was forced to raise the cash rate by 50 basis points more than expected at this month’s board meeting.
Economists forecast another 50 basis point hike in July and possibly another in August, which would take the cash rate to 1.85 percent, after being at a record low of 0.1 percent a few months ago.
Dr. Lowe will be able to expand on his views when he addresses an American Chamber of Commerce in Australia event in Sydney, co-sponsored by ANZ, on Tuesday.
On the same day, the RBA will publish the minutes of its June board meeting, which one economist says will add “color” to its thinking by raising the cash rate by 50 basis points, the biggest increase since February 2000.
Still, no one is thinking at this stage that the RBA will follow the US Federal Reserve in raising its key rate by 75 basis points last week, sending global stock markets into turmoil.
Dr. Lowe will also participate in a panel discussion in Zurich on Friday about central banks and inflation.
Back home, the weekly ANZ-Roy Morgan Consumer Confidence Index is released on Tuesday.
Last week the index, a gauge of future household spending, fell 7.6% to its lowest level since April 2020, while the percentage of respondents expecting ‘good times’ for the economy in the coming five years was reduced to 10%. its lowest level on record.
It came in the wake of the big interest rate hike and ongoing cost-of-living pressures.
Meanwhile, Australian stocks face another bumpy ride this week as financial markets face recession risk as global central banks try to curb inflation.
Wall Street managed a modest gain on Friday but still suffered the biggest weekly percentage drop in months.
The S&P 500 gained 7.07 points, or 0.19 percent, to close at 3,673.84 points, after posting its biggest weekly loss since January.
The Nasdaq Composite gained 149.11 points, or 1.39 percent, to 10,795.21 and the Dow Jones Industrial Average fell 47.13 points, or 0.16 percent, to 29,879.94.
Australian equity futures were mixed but pointed to further weakness going forward. The July contract rose eight points, or 0.12 percent, to 6,478, but the September position fell 19 points, or 0.3 percent, to 6,345.
Australia’s benchmark ASX200 index ended Friday down 116.3 points, or 1.76 percent, to a 19-month low of 6,474.8.