The bank has lifted the official cash rate from a record low of 0.1 per cent in May last year to 4.1 per cent. Inflation,which peaked at 7.8 per cent in December,has now fallen to 6 per cent,with expectations it will drop further over the coming months.
Kent,in a speech outlining the various ways higher interest rates work through the economy,said that in Australia one of the most significant impacts was through variable interest rates on home mortgages.
He said it was clear that the previous rate increases were working,noting that the full impact was still to be felt.
“These and the other channels of monetary policy are slowing the growth of demand and contributing to a decline in inflation,” he said.
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“The lags of transmission mean that some further effects of rate increases to date are still to be felt through the economy,which will provide further impetus to lower inflation in the period ahead.”
Kent said compared with previous periods when the Reserve Bank lifted interest rates,the impact on the economy of the current episode had been slightly delayed due to the large number of Australians who took out fixed-rate mortgages from 2020 to 2022.