Reserve Bank of Australia Governor Lowe in the Q&A following his earlier speech

  • CPI data in like with our expectations
  • Bank liason suggests current slow rate of wages growth to remain for a while
  • Would not want to see labour share of national income decline any further
  • Average wage growth of 2% will struggle to generate CPI at 2.5pct
  • Higher power prices are hurting business and investment
  • Increase in electricity prices will have a significant effect on CPI, will take that into account
  • Weak wage expectations are dragging on consumption
  • Says very comfortable with current setting of policy
  • Says it would be better if the AUD were a bit lower than it is

'Would be better if the AUD was a bit lower'.

Jawboning. Doing it wrong. Sheesh dude ....

More:

  • Expects cash rate in the future to be lower than in the past
  • Says neutral rate around 3.5% but a lot uncertainty about that
  • Some people got overly excited about discussion of neutral rate at last meeting

He is still going ...

  • More:
  • Looks like some of the heat coming out of the Sydney and Melbourne housing markets
  • Lot of new housing supply coming, rent growth is weak, less foreign demand
  • Rise in some mortgage rates should help slow housing markets