Michele Bullock

The Australian Financial Review.

These interest rate rises are not going to do anything for inflation in the next six months.

That's done and dusted.

We know that those prices are coming through.

Second point I would make is that it's not unreasonable for firms, if they are seeing their cost bases rise because of what's going on, whether it be fertilisers for farmers or

fuel, diesel for transport costs, it's not unreasonable for them to want to recover their costs because the alternative is if they can't they might end up going bust and that's not good either.

So there's nothing unreasonable about that.

What we're trying to guard against is because we think we had, we're pretty sure we had excess demand in the system that it will make it easier for them to do it

and easier to pass on perhaps more and that's the way that the inflation expectations gets embedded.

What we're trying to guard against is that once those new price levels are achieved that people don't think oh well it's normal for things to go up by four or five percent we'll just continue to do that.

That's the challenge.