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Should Rates Go Higher?

Should Rates Go Higher?

Former Reserve Bank of Australia governor, Philip Lowe, is worried central banks may not have increased interest rates high enough to control inflation.

Lowe who ended his tenure as RBA Governor in September 2023, also warned that the government with cost of living pressures, will only drive inflation further.

“I hope that most central banks have done enough, but I’m worried that they haven’t, and it’s doubly important that we pass this first inflation test,” Lowe says.

Lowe told a central banking conference in Hong Kong that strong jobs markets and weak productivity growth meant wages were growing at rates that would not help bring inflation rates down to target.

He is worried about the effect of countries trying to help with cost of living pressures by giving money to taxpayers including Australia which has offered $23 billion in cost-of-living assistance payments. “That tends to lead to inflation as well,” he says.


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