Kent Flags Upside Inflation Risk, Warns of Further Rate Hikes
RBA Assistant Governor Christopher Kent has delivered a more cautious message about inflation and interest rates in Australia. He emphasized that risks to inflation lean very much to the upside, according to Reserve Bank of Australia Governor Michele Bullock. This is a shift from earlier remarks by Kent on rate transmission and neutral rate estimates.
Kent highlighted weak productivity growth as a specific factor complicating the RBA's task. He noted that productivity has been 'very disappointing', making it harder for the central bank to control inflation. As a result, he raised the possibility of further interest rate hikes if upside risks materialize.
The RBA's Assistant Governor also expressed concerns about equity valuations in some markets, describing them as 'generous'. This is an unusual comment from an RBA official and adds a layer of caution to the broader risk picture.