"One or two" more rate rises to come – NAB boss

National Australia Bank CEO Ross McEwan (pictured above) expressed his belief that the Reserve Bank would likely implement "one or two" official cash rate rises in an attempt to control inflation.

However, he stressed the importance of the central bank reaching the peak rate position as soon as possible to provide certainty and alleviate concerns among households, according to a report by The Australian.

"We need to get to the top of the cycle so people get certainty and know where their money is going,” McEwan told the publication. “And I think that's the biggest thing that's worrying households."

While he believed Australia would avoid a recession, he acknowledged that people might perceive economic conditions as becoming more challenging.

The minutes from the Reserve Bank of Australia's May board meeting revealed a finely balanced decision to raise the cash rate by 25 basis points to a 10-year high of 3.85%. This decision surprised many economists and was made within the context of inflation forecasts that allowed little room for upside surprises. NAB's house economists predicted that the cash rate could reach 4.1%, with a possibility of it going up to 4.35%.

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McEwan reiterated NAB's recent remarks during their half-year earnings presentation, stating that only a small number of borrowers were facing difficulties due to higher interest rates, The Australian reported. He mentioned that the bank had reached out to 7,000 customers who were expected to be most affected by the increased mortgage rates. Out of those customers, only 13 indicated a need for assistance with their loans.

Increase in productivity needed

Regarding wages growth in Australia, which recently reached around 4%, McEwan believed it would be beneficial to households. However, he emphasised the need to bring inflation under control, according to The Australian.

He also highlighted the need for increased productivity in businesses to ensure that wage increases could be passed on without generating inflation. McEwan expressed concern over the current lack of productivity growth in businesses across Australia and stressed that productivity gains should be shared through wages.

"Because if … everybody keeps up with inflation, we're going to keep inflation going,” he said. “Which comes back to, we've got to get productivity in our businesses and then the wages can go up higher than they are today."

In the year to March, Australia's wage price index, excluding bonuses, experienced its highest annual growth rate in a decade, reaching 3.7%, The Australian reported. This was revised upward from 3.4% in the previous quarter. On a quarterly basis, wages rose by 0.8%.