Reserve Bank of Australia governor Philip Lowe has warned investors local financial markets were at risk of an “abrupt adjustment” if surging US inflation forced the Federal Reserve to raise interest rates faster than expected.
Dr Lowe also said when local interest rates begin to rise, possibly later this year, he hoped the RBA cash rate would eventually hit at least 2.5 per cent over coming years.
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John Kehoe is economics editor at Parliament House, Canberra. He writes on economics, politics and business. John was Washington correspondent covering Donald Trump’s first election. He joined the Financial Review in 2008 from Treasury. Connect with John on Twitter. Email John at jkehoe@afr.com
