Comments by RBA governor Philip Lowe
- Next rate move will likely be up, not down
- Continuation of current stance of monetary policy will help economy adjust
- Further progress on unemployment, inflation expected to be only gradual
- It is “reasonable to expect” economic growth this year to be stronger than last year
- Serious escalation of trade tensions would risk health of global economy
- Domestically, high level of household debt remains a vulnerability
- Australia has a lot riding on China successfully managing build-up of risk in its financial system
The majority of his speech is mainly a reiteration of the RBA statement. Nothing new that we didn’t already know from Lowe and the RBA.
He says that while other central banks are hiking rates, the RBA’s circumstances are a little different. Adding that the “most likely scenario in which interest rates are increasing is one in which the economy is strengthening and income growth is also picking up”.
It’ll be quite a leap to imagine the RBA cutting rates as the next step currently, but if inflationary pressures continue to be subdued and household debt remains elevated, it’s hard to see them move toward a steady path of rate hikes either.