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- RBA’s Lowe: Rise in inflation does not require an immediate response
RBA’s Lowe: Rise in inflation does not require an immediate response
Reserve Bank of Australia (RBA) Governor Phillip Lowe sounds dovish once again while addressing the Q & A session following his earlier speech.
Key quotes
Not surprising that faster progress on economy would bring forward timing of rate hike.
Coming federal election is not a consideration for policy.
Rise in inflation does not require an immediate response.
Paying attention to broader measure of labour costs than just wage price index.
Not hanging on every wage price number.
Remains to be seen if rates will rise this year.
Clearly scenarios where we would be hiking later this year.
Still plausible that first rate rise is a year or longer away.
Surprised market pricing in same number of rate hikes as in the US.
Still struggle with market pricing for Australian rates.
Risk of inflation getting out of hand is very low.
Can respond if inflation rising too fast.
Solution to high housing prices in not to put up interest rates.
Unlikely will have to tighten aggressively to control inflation.
High debt means household sector will be responsive to higher rates.
Have unique opportunity to unemployment down without inflation getting too high.
Market reaction
AUD/USD is consolidating its gains below 0.7150 after dovish comments from RBA Governor Lowe halted the flight in the aussie. The spot is currently trading at 0.7137, still up 0.17% on the day.
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