Reserve Bank more pessimistic than government about when inflation will decline

Quarterly statement on monetary policy suggests RBA may need to hoist interest rates higher for longer

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The Reserve Bank is more pessimistic than the government about when and how quickly inflation will decline, implying it may need to hoist its interest rate higher for longer to keep price increases in check.

In its quarterly statement on monetary policy, released on Friday, the central bank elaborated on its estimates for GDP growth, consumer and wage inflation, and the jobless rate. Some of the revised forecasts, including cuts in growth, were disclosed in its explanation on Tuesday on why it lifted its interest rate for a fourth month in a row.