“There is also evidence that wages growth is picking up. Given this, and the very low level of interest rates, it is appropriate to start the process of normalising monetary conditions.”
Though Mr Lowe did acknowledge that inflation had picked up more than expected it remains lower than in most other advanced economies.
He added: “This rise in inflation largely reflects global factors. But domestic capacity constraints are increasingly playing a role and inflation pressures have broadened, with firms more prepared to pass through cost increases to consumer prices.”
The rise was largely anticipated by market analysts as a result of the surging level for inflation.