Philip Lowe: Inflation and monetary policy

Speech by Mr Philip Lowe, Governor of the Reserve Bank of Australia, to the American Chamber of Commerce in Australia (AMCHAM), Sydney, 21 June 2022.

The views expressed in this speech are those of the speaker and not the view of the BIS.

I would like to thank AMCHAM for the invitation to speak today. It is a pleasure to be here.

It is a challenging time in the global economy. Most countries, including the United States and Australia, are experiencing the highest rates of inflation for many years. The tragic events in Ukraine have led to sharp increases in the prices of food and energy. And interest rates are rising around the world from the record lows during the pandemic. All this is happening at a time when unemployment rates are as low as they have been for many decades and household budgets are under pressure. So, it is a complex policy environment.

Today, I would like to begin by focusing on the recent inflation data and the outlook for inflation. I will then turn to how monetary policy is responding to the higher inflation. I would also like to share with you some of the observations from the Reserve Bank Board's review of the yield target, which was published earlier this morning. This review is one element of a broader set of reviews the Board is undertaking of our pandemic response. We want to be transparent and open, and to learn lessons for the future.