“Australia's top central banker on Tuesday flagged a lot more policy tightening ahead as rates were still 'very low' and it was important that higher inflation did not feed into public expectations and wage claims,” said Reuters as it quotes Reserve Bank of Australia (RBA) Governor Philip Lowe.
The news adds, “Reserve Bank of Australia (RBA) Governor Philip Lowe said price pressures continued to build both globally and domestically and inflation was now seen reaching 7% by the end of the year, up from a previous forecast of 6%.”
As we chart our way back to 2 to 3% inflation, Australians should be prepared for more interest rate increases.
The level of interest rates is still very low for an economy with low unemployment and that is experiencing high inflation.
I want to emphasize though that we are not on a pre-set path.
How fast we increase interest rates, and how far we need to go, will be guided by the incoming data and the Board's assessment of the outlook for inflation and the labor market.
It was important that inflation expectations remain anchored around 2-3% and that higher prices now did not feed through to expectations of rising inflation in the future.
Higher interest rates have a role to play here, by helping ensure that spending grows broadly in line with the economy's capacity to produce goods and services.
Following the hawkish comments from RBA’s Lowe, AUD/USD remains firmer, taking rounds to the intraday high near 0.6975 at the latest.
Also read: AUD/USD extends recovery towards 0.7000 as RBA praises yield targeting, Lowe eyed
© 2000-2024. All rights reserved.
This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.