Reserve Bank deputy governor Guy Debelle has told senators a little bit more inflation is welcome, but just days out from a monthly board meeting he has declined to provide the central bank’s latest forecasts.
Dr Debelle addressed a Senate estimates hearing on Thursday, the day after the latest inflation figures for the September quarter showed underlying measures being stronger than expected.
The annual rate of underlying inflation – which smooths out excessive price swings and is linked to interest rate decisions made by the RBA – unexpectedly jumped to 2.1 per cent.
It was the strongest result in six years and took it within the central bank’s 2-3 per cent inflation target.
“The monetary policy settings we have in place, as do other central banks around the world, are looking to generate a little higher inflation than we have seen over the last five, six years, as well generate more jobs,” Dr Debelle said.
“A little bit more inflation is welcome, a lot more inflation isn’t.”
But he declined to offer senators the bank’s latest inflation forecasts ahead of Tuesday’s board meeting and the release of the central bank’s quarterly statement on monetary policy on Friday.
“I’d rather not update them in the middle of a Senate estimates hearing,” Dr Debelle said.
The RBA has repeatedly said it would not lift the cash rate until inflation was sustainably within the target band, something it has not expected before 2024.
On the economy more broadly, Dr Debelle said there were signs of strong underlying momentum as NSW and Victoria came out of their respective coronavirus lockdowns.
“We will have to see how it unfolds. But most of what we are seeing is positive,” he said.