RBA’s Lowe: Some further tightening required to ensure inflation returns to target within reasonable timeframe
|Early Friday morning in Asia, Reserve Bank of Australia (RBA) Governor Philip Lowe and a few Deputy Governors appeared before the House of Representatives Standing Committee on Economics.
Among the top-tier statements, RBA Governor Philip Lowe’s defense of the tighter monetary policy gained major attention as the Aussie central banker said, per Reuters, “It is possible that some further tightening of monetary policy will be required to ensure that inflation returns to target within a reasonable timeframe.”
The policymaker also refrained from cheering the victory on inflation while adding that things are in the right direction. It should be noted that RBA's Lowe highlighted fears of China's growth slowdown by citing it as a threat to the global economy.
RBA's Lowe showed confidence about inflation reaching the target while saying, "The worst is over."
Key statements
The Australian economy is currently experiencing a period of below-trend growth and this is expected to continue for a while yet.
The central scenario is that economic growth remains subdued for the rest of this year before gradually picking up to around 2.25% by the end of 2025.
We expect employment to continue to grow but below the rate of growth in the labor force.
Our central forecast is for CPI inflation to be around 3.25% by the end of next year and to be back within the 2–3% target range by late 2025.
Rates are restrictive so we are in calibration stage with policy.
Market reaction
The news fails to move a needle on the AUD/USD price as the quote remains pressured near 0.6515 by the press time, holding lower grounds at the weekly bottom after a volatile day.
Also read: AUD/USD: Strong yields keep bears hopeful of testing 0.6480 support, US data eyed
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.