Reserve Bank of Australia Governor Phil Lowe speaking, his topic is "The Labour Market and Monetary Policy"
- No need to move in lockstep with central banks that are tightening
- Not seeking to stimulate rapid increase in inflation as that carries financial stability risks
- Says stability of unemployment has "allowed us to be patient"
- Says central scenario remains for gradual rise in underlying inflation
- Says low probability of sudden revival in wages, inflation in australia
- Says gradual lift in wages growth is central to inflation outlook
- Says labour market has performed well in recent times, on a number of measures
- Sees welcome pick up in employment across country, likely to continue
- But underemployment is elevated and job security has become an issue for more people
- Says growth in average hourly earnings slowest in many decades
- Says persistent weakness in wages has lowered expectations of future income growth
- Says impact on expectations is more than just temporary
- Increased competition from globalisation, technology eroding job security
Plenty in this speech, but no direct comments on the AUD from Lowe at all. Those headlines above via Reuters quick summary.
I headlined the post with the "No need to move in lock step" comment. When the world went to hell the RBA took action but it was tame compared to many other central banks - no QE, for example (not yet, anyway :-D ) ... so as other central banks move to rein in their programs there is not as much for the RBA to rein in.
The topic of his speech is the labour market, he has spent a lot of the speech on just that; the picture he paints is one that seems well supported by the evidence - improving but still a ways to go.
Policy implications? The RBA appears to be well and truly on hold, they've appeared that way for a long time and this speech does not change that perception.
