The Reserve Bank will need to lift the official interest rate at least twice more to ensure the “scourge” of inflation is contained, with the pace and size of increases determined in part by how fast wages pick up, the bank’s governor, Philip Lowe, has warned.
In a speech on Thursday, Lowe admitted the pace of inflation had caught the RBA and other central banks flatfooted. He said they had no choice but to lift the cost of borrowing to stop an “inflation psychology” from taking hold.
