Reserve Bank governor delivers ‘very stark message’ to Australians

The Reserve Bank governor has delivered a “very stark message” to Australians.

On Tuesday, the Australian share market fell by more than five per cent within the first 20 minutes of trading. By the end of the day, nearly $90 billion had been wiped from the market.

3AW Money News host Brooke Corte says we can expect another drop of between 0.5 to 1 per cent in the market today.

She says a lot depends on what the United States Federal Reserve announces at 4am tomorrow (AEST).

“The Federal Deserve in the United States is expected to deliver this mega increase in rates — 0.75 per cent. They haven’t gone that hard in about 30 years in the US. The concern is, of course, inflation is so strong at the moment they’re basically going to have to raise rates to the point it’s going to be a sledgehammer to the economy, and that’s the realisation everyone’s got at the moment,” she said.

Ms Corte said the Reserve Bank of Australia governor Philip Lowe’s message last night on the ABC’s 7.30 was a stark one.

“Essentially the Reserve Bank here in Australia, the US Federal Reserve, they’ve been too slow to move with the inflation pitch we’ve got, so they are going to have to raise rates pretty quickly, and actually the RBA governor gave an extremely rare media interview last night on the 7.30 report, and to me he was delivering a very stark message.”

“To come out and say ‘If you’re watching what’s happening in the United States, they’re raising rates really quickly, we’re going to have to do the same in Australia as well’, I think that was a big message that’s come from him,” Ms Corte said.

Press PLAY below to hear what Brooke Corte thinks will happen next