RBA Assistant Governor Christopher Kent said in a speech that “the improvement in the economic outlook globally and in Australia has contributed to a rise in sovereign bond yields to around pre-pandemic levels.” There has been increase in inflation expectations to be “more in line with central banks’ targets”. Also expectations of short term interest rates have “increased a bit”.
But households and business continue to “benefit from record low interest rates” and their balance sheets are “in good shape”. The economy is “benefiting from supportive fiscal policy. He added, “there are good prospects for growth and an eventual increase in wages and inflation”. But the process will be “gradual” and inflation is unlikely to be sustainably within target rate “until 2024 at the earliest”.
