No Rate Hike – RBA Gov Lowe
The Reserve Bank of Australia board is evaluating the move as early as June next year for financial markets but continues to believe that a rate hike will not be necessary until 2024 given local wage momentum and inflation.
Key Notes –
• RBA governor says official rate hike in 2022 is impossible and could only happen in 2024
• Elsewhere, many factors that have driven inflation and soaring wages are “quieter” in Australia
• But Philip Low says there’s a lot of uncertainty there It has been pointed out that there is an RBA prediction around
Reserve Bank of Australia (RBA) November Policy Minutes (RBA) The Bank’s Board of Directors acknowledged rising inflation risks in the third quarter due to unexpectedly high consumer prices, according to the November policy minutes released on Tuesday. The market is betting on at least three raises over the next year, largely reflecting inflationary pressures around the world, especially in the US.
However, Low emphasized that the situation in Australia is different. Core inflation soared to 2.1% in the third quarter but reached the RBA’s target range of 23% for the first time in six years. As for interest rates, the central bank’s board has said it will not raise rates until inflation reaches its target range. It’s difficult to define exactly what “stable in target range” means. However, we would like to see core inflation in the 2-3% range and have reasonable confidence that it will not fall again. The trajectory of inflation is also important, as a slow rise in core inflation has various effects on rapid growth policies. Another important point is the development of the labor market.
The pandemic may have reversed the situation for a while, as businesses complained about a shortage of adequate labor due to border closures in Australia and talked about big salary offers in some hotspots like cyber security.
However, as borders reopen soon, the government is again talking about expanding immigration, primarily to lists of students and agricultural workers.