RBA Governor Lowe says if inflation stays high we will feel a lot of pain

Reserve Bank of Australia Governor Lowe spoke earlier:

RBA Gov Lowe: Further tightening of monetary policy may be needed

Follow up Q&A now. Lowe:

• Its perfectly understandable for lowest paid workers to be compensated for inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term
• We'll get into trouble if we accept that all workers need to be compensated for inflation
• If inflation stays high we are going to feel a lot of pain

• Hasn’t been any shift in the RBA’s inflation tolerance, what has changed in recent months is the RBA's assessment of risks

Lowe adds:

• Australians shoulddn't fall into a state of despair. Says there is a path back to better times and increasing real wages.

Lowe shouldn't set himself up as a motivational speaker. If he put the scare into people instead of these attempts at cheering us all up, the RBA efforts to subdue demand in the economy via rate rises, and hence reduce inflationary price pressure, would be more effective.

The RBA cash rate is still well under the CPI rate: