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.”
About the author
About the author
Banking
Banks report $14.4bn profit amid pressure on net interest margins
Australia’s major banks have reported a significant boost to their bottom lines and returns in the first half of the 2022 financial year, signaling sector-wide resilience despite persistent pressure...Read more
Banking
Major banks report rising profits
NAB and ANZ announced their half-year results this week. ...Read more
Banking
Modernisation of direct debit system suffers setback
According to the Reserve Bank (RBA), several major banks will not be able to meet the current timeline for the launch of the PayTo service. ...Read more
Banking
Australians' trust in digital providers has decreased in last five years
Australians have little trust in organisations keeping their information secure, but the financial services industry still sits atop the list. ...Read more
Banking
Commonwealth Bank chairman to retire in August
The Commonwealth Bank (CBA) board has announced a successor. ...Read more
Banking
Westpac responds to $113m penalty
The big four bank has responded to the penalty handed down last week. ...Read more
Banking
Westpac ordered to pay $113m for ‘widespread compliance failures’
Westpac has been ordered to pay penalties in the amount of $113 million for widespread compliance failures across multiple businesses, including Westpac’s banking, superannuation, wealth management ...Read more
Banking
Big bank-backed start-up raises $12.75m
A landmark fundraise by Australia’s biggest banks has secured a war chest of $12.75 million to the sector’s blockchain consortium, Lygon, to bolster its research and development into helping banks...Read more
Wrapping up an eventful 2021
Listen now
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
Banking
Banks report $14.4bn profit amid pressure on net interest margins
Australia’s major banks have reported a significant boost to their bottom lines and returns in the first half of the 2022 financial year, signaling sector-wide resilience despite persistent pressure...Read more
Banking
Major banks report rising profits
NAB and ANZ announced their half-year results this week. ...Read more
Banking
Modernisation of direct debit system suffers setback
According to the Reserve Bank (RBA), several major banks will not be able to meet the current timeline for the launch of the PayTo service. ...Read more
Banking
Australians' trust in digital providers has decreased in last five years
Australians have little trust in organisations keeping their information secure, but the financial services industry still sits atop the list. ...Read more
Banking
Commonwealth Bank chairman to retire in August
The Commonwealth Bank (CBA) board has announced a successor. ...Read more
Banking
Westpac responds to $113m penalty
The big four bank has responded to the penalty handed down last week. ...Read more
Banking
Westpac ordered to pay $113m for ‘widespread compliance failures’
Westpac has been ordered to pay penalties in the amount of $113 million for widespread compliance failures across multiple businesses, including Westpac’s banking, superannuation, wealth management ...Read more
Banking
Big bank-backed start-up raises $12.75m
A landmark fundraise by Australia’s biggest banks has secured a war chest of $12.75 million to the sector’s blockchain consortium, Lygon, to bolster its research and development into helping banks...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
