Global shocks likely to drive more frequent interest rate changes, RBA says

Reserve Bank of Australia governor Philip Lowe says global factors mean inflation is likely to be less predictable in future. Photograph: Daniel Munoz/Reuters

Inflation is likely to become more volatile in the future as globalism retreats and climate shocks mount, requiring central banks to adjust interest rates more often, the Reserve Bank governor has said.

Philip Lowe, in a Committee for Economic Development of Australia speech in Melbourne on Tuesday, said the current spike in prices was soon expected to peak at around 8% before declining to “a little over 3%” by the end of 2024. Improving post-Covid supply chains, cheaper commodities and the effects of interest rate hikes – with more possible – would combine to rein in inflation.