Philip Lowe

Governor Philip Lowe acknowledged some missteps in the central bank’s strategy on inflation during his tenure and said while the inflation target is now in view, further rate hikes may still be necessary to complete the bank’s important task.

Speculation over Lowe’s future as the RBA chief had been swirling for months amidst fallout over interest rate decisions. Bullock, the current deputy governor, will become the first female leader of the central bank.

While markets expected a pause, the RBA board’s hawkish tone implying a further cut in August surprised many. For Australia’s property sector in particular, observers say the path to a soft landing may be getting even more treacherous.

The March quarter’s Selected Living Cost Indexes – which include mortgage costs, giving a fuller view of inflation’s real impact than the Consumer Price Index – show employee households and mortgage holders both saw record increases in their cost of living. And with rate hikes continuing to flow through the economy, more pain is on the horizon.

In the first external review of the central bank in four decades, an expert panel has recommended a major shake-up, including the establishment of a new board responsible for monetary policy. RBA Governor Philip Lowe welcomed the changes while defending the current board’s decision-making capabilities.

Governor Philip Lowe took a more dovish tone in announcing the central bank would leave the cash rate target at 3.6 percent, as markets welcomed the chance to let the 350 basis points of tightening already engineered to take full effect on the economy.

Australia can still avoid a recession, RBA Governor Philip Lowe told Parliament in dual grilling sessions in Canberra – while he was keen to remind the country of the need for further belt-tightening and a drop in inflation expectations to keep the path to a soft landing open.

The regulator will look into the discrepancy between the interest rates banks charge borrowers and those they pay depositors, as the RBA’s rate-hiking campaign propels the big four banks toward record profits.

The cost of living has risen dramatically in 2022, with the Reserve Bank of Australia increasing the cash rate seven times since April and the major banks keeping pace on mortgage rates. But there could be good news on the horizon.

The Reserve Bank of Australia is sticking to its view that inflation will be temporary, despite its poor forecasting track record. Economists aren’t so sure.