RBA To Remain Patient Before Rate Hike, Says Lowe
February 01 2022 - 9:22PM
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Reserve Bank of Australia Governor Philip Lowe said the bank is
prepared to remain patient before it raises its key interest rate
as policymakers monitor the evolution of various factors affecting
inflation.
The board will not increase the cash rate until inflation is
sustainably within the 2 to 3 percent range and it is too early to
conclude that inflation is sustainably in the target range, Lowe
said at the National Press Club of Australia on Wednesday.
"We will also be looking for further evidence that labour costs
are growing at a rate consistent with inflation being sustained
within the target range," he said. "We expect this evidence to
emerge over time, but it is unlikely to do so quickly."
The unemployment rate is forecast to fall to around 3.75 percent
by the end of this year and be sustained at around this rate during
2023.
In terms of underlying inflation, the midpoint of the target
range has been reached for the first time in over seven years, Lowe
said. This comes on the back of very significant disruptions in
supply chains and distribution networks, which would be expected to
be resolved over the months ahead.
But standing here in early February, the governor said the
economy is closer to full employment and achieving the inflation
than had anticipated earlier.
On Tuesday, the RBA had decided to discontinue its bond purchase
programme and kept its cash rate unchanged at a record low of 0.10
percent. But the governor said ceasing purchases under the bond
purchase program does not imply a near-term increase in interest
rates.
The RBA is set to release a full set of updated economic
forecasts on Friday in the quarterly Statement on Monetary
Policy.
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