Reserve Bank of Australia governor Philip Lowe has issued a bleak warning on the perils of high inflation after the bank lifted the official interest rate to 2.85 per cent and said more rises were coming with inflation now forecast to peak higher and stay there for longer.

Defending the RBA’s seventh straight rate rise, Dr Lowe said high inflation was a scourge that needed to be dealt with swiftly to stop people becoming accustomed to high price increases, making a bad situation worse.