RBA Governor Says 'Evil of Inflation' Must Be Ended

By James Glynn

SYDNEY--The Reserve Bank of Australia has slowed the rate at which it raised interest rates, but inflation remains a scourge that must be rooted out, Philip Lowe, the central bank's governor, said Tuesday.

In a speech that followed the RBA's decision earlier in the day to deliver a second consecutive 25-basis-point rise in official interest rates, Mr. Lowe said the damage being done to the economy by higher inflation dominated discussion around the board table.

"I would like to take the opportunity to assure you that the board is resolute in its determination to return inflation to the 2 to 3 percent target range. We will do what is necessary to achieve that," he said.

"At our meeting today we discussed the damage that high inflation does to people; it is a scourge. High inflation devalues your savings. It worsens inequality in our society and it undermines our living standards. It hurts us all by impairing the functioning of our economy," Mr. Lowe added.

Over the year to September, Australia's inflation rate was 7.3%, the highest rate in more than three decades.

The RBA raised its inflation forecast on Tuesday to a peak of 8% or more in the fourth quarter, up from an earlier forecast of 7.75%.

If interest rates aren't raised, "the evil of inflation would be with us for longer and the eventual increase in interest rates needed to bring it down would be greater. This would increase the risk of a severe recession and a sharp rise in unemployment," Mr. Lowe said.

Write to James Glynn at [e-mail]

(END) Dow Jones Newswires

11-01-22 0434ET