RBA gov Lowe with scheduled speech 21 Nov
- more likely next move in rates is up rather than down
- weakening case for lower rates as economy picks up
- board paying more attention to weak growth in wages, household incomes
- increased retail competition likely to restrain inflation for the moment
- has seen some cooling in the Sydney housing market
AUDUSD sees a quick spike from 0.7635 to test 0.7650 but fails for the moment.
Lowe concludes a length speech with:
So, in summary, over the past year or so there has been progress in moving the economy closer to full employment and in having inflation return to the 2 to 3 per cent range. Both of these are positive developments and suggest a more familiar normal is still in sight. Progress on these fronts has been made while also containing the build-up of risks in household balance sheets.
We still, though, remain short of full employment, and inflation is expected to pick up only gradually and remain below average for some time yet. This means that a continuation of accommodative monetary policy is appropriate. If the economy continues to improve as expected, it is more likely that the next move in interest rates will be up, rather than down. But the continuing spare capacity in the economy and the subdued outlook for inflation mean that there is not a strong case for a near-term adjustment in monetary policy. We will, of course, continue to keep that judgement under review.
Full speech entitled " Some evolving questions" here
Do Lowe and the RBA have the answers though?
