Reserve Bank of Australia Governor Lowe, Headlines via Reuters
- expects conditions for rate hike will not be met next year
- "still a fair way" from a hike, the board is prepared to be patient
- board discussed tapering bond-buying from Feb and ending in May
- could end bond buying in Feb if economic progress better than expected
- could review bond-buying again in May if data disappoint
- QE outlook depends on inflation data, labour market, the strength of consumer spending
- will consider actions of other central banks, effects of omicron variant
- omicron outbreak represents a downside risk
- expects positive momentum in the economy to be maintained through the summer
- underlying inflation is expected to rise to 2.5% over 2023
- inflation outlook in Australia very different than in the US
- estimates total extra savings by households during pandemic at more than A$200 bln
- additional savings will support strong growth in consumption
- notes sharp rise in job ads, reports firms finding it difficult to find workers
- it is not our mandate to target house prices, higher rates not the solution
Full text:
The RBA and the Australian Economy
Lowe is still in the transitory camp on inflation:
- "These factors are expected to wane over the year ahead and inflation is expected to come down, although it is still uncertain by how much."
On tapering of QE Lowe has left his options wide open. Could end in February, or not. Could be reviewed in February. Could be reviewed again in May. I think 'data dependent' is a good summary and may even enter the RBA narrative in coming weeks and months.
As for rate hikes, Lowe says not to even think about it (I'm paraphrasing) ... "still a fair way" from a hike,
Meanwhile, AUD/USD doing very little.
