Reserve Bank governor sheds light on rates, economy

Reserve Bank governor Philip Lowe gave evidence to a Senate inquiry in Canberra on Wednesday.

Showing empathy:

"I get a lot of people writing to me at the moment telling me about their personal circumstances and it's really, really tough, I understand that. I read those letters and hear those stories with a very heavy heart."

On why interest rates are rising:

"Raising interest rates is always unpopular and it affects the whole community ... but we keep doing our job and our job is to make sure inflation comes down and hopefully preserve the gains in unemployment we have made."

On the damage from untamed inflation:

"I hope people understand that inflation is damaging and corrosive."

On bankruptcies:

"How many business failures we see will ultimately depend on how the economy grows."

On economic reform:

"One of the reasons the Australian economy did so well over many decades was that we had a series of reforms that made us more competitive, made the economy more dynamic and that delivered stronger growth."

On how RBA board meetings operate:

"We go around the table each time and each board member expresses their views. And the experience I have had as governor is that we all come to the same conclusion. We explore the issues from every angle."

On wages:

"We think growth in the wage price index will get up to four per cent, maybe a bit higher, and probably not go much higher than that."

Australian Associated Press