If the Official Cash Rate was raised as high as 5.5 percent (from its current 4.25) it would be "a step too far", he said.
The impact of much higher interest rates was already flowing through to business costs.
"Inflation pressure is continuing to build and that again is playing on businesses but I do think the labour market will soften this year."
Businesses were already signalling they would hire fewer staff.
If there was a global recession, the country's economy would be in for a much harder landing, Kerr said.
Dear Mr. Kerr, maybe review those US graphs a little bit closer.