Goldman Sachs: RBA's Lowe emphasizing easing downside risks for OZ economy
Reserve Bank of Australia Governor Philip Lowe spoke yesterday:
- RBA's Lowe speaking - domestic economy likely to grow faster
- More from RBA's Lowe: No crisis in global jobs market, wage growth is problem
Goldman Sachs have a client note out on his comments. This is GS' 'bottom line' summary:
- RBA Governor Lowe ... remained upbeat about the cyclical growth recovery, both globally and in Australia.
- Despite "plenty of risks out there", Governor Lowe recognised that "we are in a better position than we have been for some time" globally.
- On the Australian economy, the Governor described business conditions as having "improved noticeably" and employment as "having strengthened in recent months". While risks still remain and the RBA continues to watch closely the elevated levels of household debt, high house prices and "unusually low" wage growth, growth is expected to be stronger "over the next couple of years" than it has been recently.
GS note implications
- Overall the Governor's comments today continued to emphasize the easing downside risks in the Australian economy; and with growth continuing to recover and financial imbalances still elevated, we believe the current "emergency-level" low interest rate setting is unwarranted, and that financial markets are under-estimating the probability of a gradual tightening cycle commencing by the end of the year (GS: +25bp November).
(any bolding above is mine, the points hit by Lowe are a good nutshell summary of where the Bank sees the Australian economy)
Still to come later today from the RBA - June meeting minutes, for release at 0130GMT