RBA’s Lowe: Nominal wage growth has not been source of inflation
|“Nominal wage growth has not been source of inflation”, said Reserve Bank of Australia (RBA) Governor Philip Lowe while giving testimony before the Senate Economics Legislation Committee, in Canberra.
Key comments
We're in data dependent mode.
Not a single variable that drives our decisions.
Reasons for weak productivity growth complex.
Serious about inflation target, want to preserve gains in labor market.
Inflation expectations well anchored, cannot take for granted.
Entrenched inflation would lead to higher interest rates and unemployment.
Will do what is necessary to make sure inflation comes back to target range in next few years.
Taken decision to enter no new contracts with PWC until statisfactory response over tax leak controversy.
Budget didn't change outlook for rates.
We're on a narrow path, success is not guaranteed, going to be painful for a while yet.
One factor behind may rate rise was to reinforce RBA serious about getting inflation down.
Market reaction
AUD/USD ticks up to 0.6520 in an immediate reaction to the statements from RBA’s Lowe. However, the Aussie pair stays defensive as it braces for a busy day ahead.
Also read: AUD/USD retreats amidst market uncertainty, US debt ceiling disputes ahead of Aussie CPI
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