While financial markets are pricing in an official rate rise by the middle of next year,Dr Lowe said he still believed 2024 was the most likely jumping-off point.
This week,Prime MinisterScott Morrison said the government was committed to “keeping downward pressure” on interest rates,in an echo of the campaign run by then party leader John Howard in the 2004 election.
But Dr Lowe said higher interest rates would mean the economy was mending,inflation was back within the RBA’s 2-3 per cent target band and wages were growing reasonably strongly.
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“We’re trying to get interest rates up over time. If we’re successful,interest rates will go up. People borrowing today need to remember that,” he said.
Dr Lowe said he would hope to get official interest rates back to a “neutral rate” of at least 2.5 per cent,if not 3.5 per cent.
An increase to 2.5 per cent would lift the repayments on a $750,000 mortgage,the current average loan for an established house in NSW,by $1004 a month or $12,048 a year. At 3.5 per cent,home loan repayments would climb by $1468 a month or $17,616 a year.