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Reserve Bank of Australia’s Governor, Phillip Lowe spoke before the CPA Australia Riverina Business Conference and signaled a number of stances regarding the central bank’s upcoming policy. The title of Lowe‘s speech wass, ‘the RBA and the Australian Economy.’
Key Remarks
The conditions for a rate hike will not be met next year.
Lowe expects conditions for rate hike will not be met next year.
Lowe says “still a fair way” from a hike, board is prepared to be patient.
Lowe says board discussed tapering bond-buying from Feb and ending in May.
Lowe says could end bond buying in Feb if economic progress better than expected.
Lowe says could review bond-buying again in may if data disappoint.
QE outlook depends on inflation data, labour market, strength of consumer spending.
Lowe says will consider actions of other central banks, effects of the omicron variant.
Lowe says the omicron outbreak represents a downside risk.
Lowe expects positive momentum in economy to be maintained through the summer.
Underlying inflation expected to rise to 2.5% over 2023.
Lowe says inflation outlook in Australia very different than in US.
Lowe estimates total extra savings by households during pandemic at more than AUD 200 billion.
Lowe says additional savings will support strong growth in consumption.
Lowe notes sharp rise in job ads, reports firms finding it difficult to find workers.
Lowe says it is not our mandate to target house prices, higher rates not the solution.
The AUD/USD pair has remained stable and has not reacted to Lowe’s comments.
