Michelle Bullock

We feel we're now in a position where we've got space to be alert now to both sides of the risks, the inflation and the potential risks to the downside if the war continues.

RBA's target for inflation is 2.5% and data for the December quarter showed year-ended headline inflation was 3.6%, underlying inflation was 3.4%.

High inflation hurts all Australians.

The board now thinks it will take longer for inflation to return to target.

The board has taken a cautious approach.

They've made one rate rise this time and we'll observe now what happens to financial conditions.

We're already observing some tightening in financial conditions, including through the exchange rate a bit.

And we'll wait and see what the response of some of the credit, housing, those sorts of things.

I'm not predicting there'll be more rate rises, but I'm also not saying that if inflation does remain too high, that there mightn't be.

Now, I know this is not the news that Australians with mortgages want to hear, but it is the right thing for the economy.

I do understand that for mortgage holders, this isn't a great outcome.

Having said that, what's also not great for them or for anyone else is if inflation remains elevated.

The price level has gone up 20% to 25% over the last few years.

That's, I think, what's hurting people.

The board still has basically the same strategy.

They're still looking to bring inflation down without giving up so many of the gains we've had.

This interest rate rise, it comes across quite negatively.

We're actually in a really good position.

The labour market is really strong and domestic demand is recovery.

These are good things, but it's just that we're supply constrained.