Lowe has also admitted the RBA suffered 'Reputational damage' when it tried to wind back its COVID-19 pandemic stimulus program.

Speaking on Tuesday at an event in Sydney, the RBA Governor said the share of items in the consumer price index (CPI) basket experiencing annual price increases greater than 3 per cent was at its highest level since 1990.

He said the RBA has had to adjust its forecasts higher for retail electricity and gas prices, given the problems with energy supply on Australia's eastern seaboard.

Lowe says Australians should prepare for higher interest rates:

Reserve Bank governor, Philip Lowe, has continued addressing the American Chamber of Commerce this morning. He says Australians should prepare for higher interest rates.

Adding to his comments about doing whatever was necessary to address inflation, Lowe warned that interest rates were still “Very low” for an economy facing such high inflation and low unemployment:

"As we chart our way back to 2 to 3% inflation, Australians should be prepared for more interest rate increases."

"We decided to make a bigger 50 basis-point adjustment on the basis of the additional information suggesting a further upward revision to an already high inflation forecast."

The board also gave consideration to the fact that the level of interest rates was still very low.

"I want to emphasise though that we are not on a preset path."

"How fast we increase interest rates, and how far we need to go, will be guided by the incoming data and the board’s assessment of the outlook for inflation and the labour market."

Lowe believes inflation will return to normal in 'A couple of years'

Lowe was then asked when he thinks inflation will return to normal?

"It is a couple of years away. We haven’t yet done a full update of our forecasts following the May update."

"The new headline inflation forecast was done mechanically from higher oil prices and higher electricity and gas prices. In the next month or so, we will be doing a full forecast update."

"It is going to be some years, I think, before inflation is back in the 2-3% range."

"Over the next couple of years, it will gradually come down. That is why it is important that we chart this path back there and people have confidence that we will do that."

Sources | ABC & Guardian