Lowe goes higher
Aussies should prepare for more economic pain in the coming months, but we’re not preparing for the R-word quite yet… Reserve Bank Governor Philip Lowe says a recession [insert shudder] is unlikely for Oz at this stage. He pointed to our lowest unemployment rate in 50 years, booming trade exports and low-interest rates as evidence of our “strong” economic fundamentals. But with inflation tipped to hit 7% (up from the current rate of 5.1%) and for it to stay higher than the 2-3% target rate for a couple of years, Lowe says get ready for a year of interest rate hikes. And while acknowledging the central bank has suffered “reputational damage” recently, Lowe disagreed with market predictions that interest rates will hit circa 4% by year’s end, saying that would hurt vulnerable Aussies and homebuyers.
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