Inflation will remain a threat to the economy for some time yet, RBA governor Glenn Stevens told the House of Representatives Standing Committee on Economics today.
“Headline inflation figures will remain uncomfortably high for a little while yet,” Mr Stevens said.
According to RBA forecasts, the CPI will peak at around five per cent in the September and December quarters.
“Admittedly we are probably six months away from seeing clear evidence that inflation has begun to fall, and even then it has to fall quite some distance before it is back to rates consistent with achieving two to three per cent on average,” Mr Stevens said.
Mr Stevens said the board’s strategy would be to aim for a gradual fall in inflation over a longer period, minimising the risk of a sharp economic slump.
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