© Bloomberg. Philip Lowe, governor of the Reserve Bank of Australia (RBA), delivers his keynote address during the AFR Summit in Sydney, Australia, on Wednesday, March 10, 2021.Lowe pushed back against bond markets pricing in an earlier tightening of monetary policy, sending yields lower as he reiterated that interest rates are unlikely to rise until at least 2024.
(Bloomberg) — Australian wages will need to grow at “3 point something” to sustain inflation around the middle of the central bank’s 2-3% target, Governor Philip Lowe said, while adding that it will not be the sole determinant for price pressures and, in turn, policy.
“Rather, we are using wages growth as one of the guideposts in assessing progress towards our goal and whether inflation is sustainably in the target range,” Lowe said in the text of a speech Tuesday. “As we get closer to that goal, you could expect us to provide further guidance, including our projections for inflation.”
His comments come as markets challenge the Reserve Bank of Australia’s dovish stance that rates are likely to remain at a record low of 0.1% for about two more years. The RBA chief, like counterparts around the world, is grappling with whether a recent acceleration in prices is temporary or more enduring.
Data last month showed third-quarter core inflation jumped back inside the RBA’s target for the first time in six years. Wages data for the same period is due out Wednesday and will further shape views on the outlook for policy in Australia.
“We still have a way to go,” Lowe said, emphasizing that inflation is only just above the bottom of the target band. He pointed out that the trajectory for consumer-price growth is also important, with a slow drift up having different policy implications to a sharp rise.
The governor reiterated that it was “still plausible” the first increase in the cash rate will not be before 2024. That view is in stark contrast to market expectations, where overnight interest swaps imply at least three rate hikes next year and the chance of a fourth.
Lowe did lay out a scenario where the inflation shock is more persistent and the labor market tightens at a faster pace, building the case for a rate increase before 2024. But once again he pushed back against bets for hikes next year.
“The latest data and forecasts do not warrant an increase in the cash rate in 2022,” Lowe said. “The economy and inflation would have to turn out very differently from our central scenario for the board to consider an increase in interest rates next year.”
©2021 Bloomberg L.P.
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Stay connected with us on social media platform for instant update click here to join our Twitter, & Facebook
We are now on Telegram. Click here to join our channel (@TechiUpdate) and stay updated with the latest Technology headlines.
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.
Denial of responsibility! NewsAzi is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.
