RBA Governor Glenn Stevens has hinted at further interest rate rises, claiming Australia’s economic strength is likely to drive interest rates higher.
“The very low interest rate settings were designed for a weaker economy than we are in fact facing,” he told a gathering in Perth this morning.
Speaking at the breakfast hosted by the Financial Services Institute of Australasia, Stevens said it was important for the central bank to raise rates last week.
The RBA lifted interest rates last week by 25 basis points to 3.25 percent, with economists predicting further hikes to come.
“If we were prepared to cut rates rapidly, to a very low level, in response to a threat but then were too timid to lessen that stimulus in a timely way when the threat had passed, we would have a bias in our monetary policy framework. Experience here and elsewhere counsels against that approach,” Stevens said.
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