RBA’s big hint on when rate pain will end

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Homeowners hoping for a reprieve to interest rate rises have been told a pause is in sight, despite the Reserve Bank governor warning inflation remained too high.

A day after the bank lifted the official cash rate to a 11 year high of 3.6 per cent, governor Philip Lowe said more rate rises could still be on the cards.

“Our judgement, though, remains that further tightening of monetary policy is likely to be required to bring inflation back to target within a reasonable time frame,” he said.

“Inflation is still too high and while it looks to be on a declining path it is likely to remain higher than target for a few years. If we don’t get inflation down fairly soon, the end result will be even higher interest rates and more unemployment.

“With monetary policy now in restrictive territory, we are closer to the point where it will be appropriate to pause interest rate increases to allow more time to assess the state of the economy. At what point it will be appropriate to pause will be determined by the data and our assessment of the outlook.”

More to come.

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