Remarks by RBA deputy governor, Guy Debelle
- There has not been any material upside surprise in inflation
- Economic recovery has "significantly exceeded" even most optimistic expectations
- But not the case for wages, inflation in Australia
- Will not raise cash rate until actual inflation is sustainably within target band
- Need to see further significant gains in employment, lower unemployment rate
- Need a tighter labour market to lead to higher wage rises
- Does not expect such conditions to be met until 2024 at the earliest
- There are tools to deal with house prices, monetary policy not one of them
- Full speech
This pretty much echoes the RBA statement from earlier in the week so there's really not much that stands out. But it is important to note this distinction by the RBA when they are talking about prerequisites to raise the cash rate:
The Board is committed to maintaining highly supportive monetary conditions to support a return to full employment in Australia and inflation consistent with the target. It will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, the labour market will need to be tight enough to generate wages growth that is materially higher than it is currently. This is unlikely to be until 2024 at the earliest.
There is a difference between forecast/outlook inflation and actual inflation, and the latter is what the RBA is talking about so that is something to be aware of.
