Philip Lowe: Inflation and recent economic data

Keynote address by Mr Philip Lowe, Governor of the Reserve Bank of Australia, to the Financial Review Business Summit 2023, Sydney, 8 March 2023.

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

Thank you very much for the invitation to join this year's AFR Business Summit. It is a pleasure to be able to join you again.

The number one near-term economic challenge facing Australia is to make sure that the current episode of high inflation is only temporary. High inflation is corrosive and damaging. If it were to persist, it would require even higher interest rates and more unemployment to bring it back down. So, it would be dangerous indeed to allow the current period of high inflation to continue. The RBA's job, as Australia's central bank, is to deliver low and stable inflation. The Board is resolute in its determination to do this by making sure that inflation in Australia returns to the 2–3 per cent target range.

Some legacies of the pandemic

The high inflation that we are currently experiencing is one of the legacies of the pandemic and of Russia's invasion of Ukraine. The pandemic interrupted the supply side of the global economy and this pushed up costs and prices. And on top of this, the monetary and fiscal policy response to the pandemic underpinned a strong recovery in demand that has also pushed up costs and prices.