Borrow
RBA governor urges borrowers to prepare for higher rates
Governor Philip Lowe is urging the populace to prepare for higher interest rates.
RBA governor urges borrowers to prepare for higher rates
Governor Philip Lowe is urging the populace to prepare for higher interest rates.
Reserve Bank of Australia (RBA) governor Philip Lowe has urged borrowers to start preparing for higher interest rates.
Speaking at the Banking 2022 Conference, Dr Lowe said many borrowers have had no experience with an interest rate-rise cycle.
“The last time the RBA increased the cash rate was in November 2010, that’s more than 11 years ago.
“To many borrowers that is going to come as quite an unwelcome development,” Dr Lowe acknowledged.
Last week, the governor acknowledged the risk of waiting too long to lift rates, especially in a world with overlapping supply shocks and a high headline inflation rate.
It was also the first time the governor acknowledged a rate hike could be on the cards for this year.
“It’s not guaranteed, but it’s plausible,” Dr Lowe reiterated on Friday.
The governor, however, stressed that the preconditions for a rate hike have not yet been met.
“We still have modest inflation here,” Dr Lowe said.
He explained that the RBA is still waiting for the 2.6 per cent underlying inflation to sustainably rest within its 2 to 3 per cent target.
But recent developments “have moved us closer to that point,” Dr Lowe said.
“One issue we’re paying close attention to is the inflation psychology. For many years, firms were reluctant to put up their prices and because they didn’t want to put up their prices, they didn’t want to put up wages.
“It’s quite possible a period of protracted headline inflation will see this psychology shift and firms will decide they have to put up their prices and their prices are rising they can afford to pay higher wages,” Dr Lowe continued.
“We’re watching very carefully for any shift in inflation psychology, if that shift occurs, inflation would be higher and more persistent and we would need to respond.”
RELATED ARTICLES
About the author
About the author
Banking
Brokers own the mortgage funnel: Why a 77% share is reshaping bank strategy in Australia
Australia’s mortgage market has quietly consolidated around one gatekeeper: the broker. With brokers facilitating roughly 77% of new home loans, distribution power has migrated from bank branches to ...Read more
Banking
Commonwealth Bank leads consideration while People First Bank tops satisfaction in YouGov’s latest rankings
In a revealing snapshot of Australia's banking landscape, the Commonwealth Bank (CBA) has emerged as the most considered financial institution among prospective customers, according to YouGov's ...Read more
Banking
End of the easing: what a major bank’s call signals for Australian balance sheets
A major Australian bank now argues the Reserve Bank’s rate-cut run has hit a pause, resetting the risk-free rate narrative across corporate Australia. The Reserve Bank of Australia’s latest Statement ...Read more
Banking
Open banking, real returns: How an Australian brokerage turned CDR data into deal velocity
Open banking is no longer a whiteboard theory—it’s a working growth engine. This case study unpacks how a mid-sized Australian brokerage (“Pink Finance”) operationalised Consumer Data Right (CDR) data ...Read more
Banking
Open banking’s quiet revolution: how one broker’s data play rewrites speed, trust and margin
Open banking is shifting from compliance cost to commercial engine, and early adopters in Australia’s broking market are already monetising the curve. The playbook: consented bank-grade data piped ...Read more
Banking
Open banking in action: An early adopter’s playbook—and the ROI case for Australian brokers
Open banking is shifting from conference buzzword to operational backbone in Australia’s broking sector. Early adopters are using bank-grade data and AI to compress underwriting cycles, cut compliance ...Read more
Banking
Australian brokerage pedals ahead using consented data for a speedy advantage
Open banking is no longer a concept; it is an operating model shift changing how brokers originate and package credit. Australia’s early movers, backed by the Consumer Data Right (CDR) and a ...Read more
Banking
BOQ’s mortgage squeeze is a market signal: where banks will win next as competition bites
Bank of Queensland’s shrinking home-loan book is more than a single-institution story; it’s a barometer of how Australia’s mortgage market is being rewired by broker power, non-bank agility and ...Read more
Banking
Brokers own the mortgage funnel: Why a 77% share is reshaping bank strategy in Australia
Australia’s mortgage market has quietly consolidated around one gatekeeper: the broker. With brokers facilitating roughly 77% of new home loans, distribution power has migrated from bank branches to ...Read more
Banking
Commonwealth Bank leads consideration while People First Bank tops satisfaction in YouGov’s latest rankings
In a revealing snapshot of Australia's banking landscape, the Commonwealth Bank (CBA) has emerged as the most considered financial institution among prospective customers, according to YouGov's ...Read more
Banking
End of the easing: what a major bank’s call signals for Australian balance sheets
A major Australian bank now argues the Reserve Bank’s rate-cut run has hit a pause, resetting the risk-free rate narrative across corporate Australia. The Reserve Bank of Australia’s latest Statement ...Read more
Banking
Open banking, real returns: How an Australian brokerage turned CDR data into deal velocity
Open banking is no longer a whiteboard theory—it’s a working growth engine. This case study unpacks how a mid-sized Australian brokerage (“Pink Finance”) operationalised Consumer Data Right (CDR) data ...Read more
Banking
Open banking’s quiet revolution: how one broker’s data play rewrites speed, trust and margin
Open banking is shifting from compliance cost to commercial engine, and early adopters in Australia’s broking market are already monetising the curve. The playbook: consented bank-grade data piped ...Read more
Banking
Open banking in action: An early adopter’s playbook—and the ROI case for Australian brokers
Open banking is shifting from conference buzzword to operational backbone in Australia’s broking sector. Early adopters are using bank-grade data and AI to compress underwriting cycles, cut compliance ...Read more
Banking
Australian brokerage pedals ahead using consented data for a speedy advantage
Open banking is no longer a concept; it is an operating model shift changing how brokers originate and package credit. Australia’s early movers, backed by the Consumer Data Right (CDR) and a ...Read more
Banking
BOQ’s mortgage squeeze is a market signal: where banks will win next as competition bites
Bank of Queensland’s shrinking home-loan book is more than a single-institution story; it’s a barometer of how Australia’s mortgage market is being rewired by broker power, non-bank agility and ...Read more
