Reserve Bank Governor Philip Lowe has warned that Australian households should brace for more interest rate pain, particularly if businesses increase prices or workers demand bigger pay rises. 

Speaking at a National Press Club lunch in Sydney, Dr Lowe noted that the recent pause in rate rises after ten consecutive increases should not be viewed as a peak in the cash rate. 

“The decision to hold rates steady this month does not imply that interest rate increases are over,” he said. 

He further warned that while the board expected some tightening of monetary policy, the timing and frequency would be evaluated month-to-month. 

Dr Lowe noted that waiting for more than a few months would result in the RBA being overrun by slowing consumption data and a deteriorating labour market outlook. 

After the latest rates decision, NAB acknowledged that Australians are likely to experience a per capita recession this year, with economic activity per person declining and a corresponding decline in the standard of living. 

Many economists remain confident Australia can avoid a full blown recession.