RBA Governor Lowe: Prepared to use unconventional policy if its warranted

Prepared to use unconventional policy if its warranted comments fail to sustain the downside in AUD/USD.
We are prepared to cut rates further to meet our inflation and employment goals - Lowe said.
It is unlikely but possible that we head to the lower bound; hope to avoid doing so.

Ross J Burland FXStreet

RBA governor Lowe is appearing before the House of Representatives' Standing Committee on Economics in Canberra. He is delivering a prepared text and along with colleagues will be answering politicians’ questions for about 3 hours.

He is dovish but has just made the most dovish statement yet, something that the markets were looking for and he delivered:

Prepared to use unconventional policy if it's warranted.
It is unlikely but possible that we head to the lower bound; hope to avoid doing so.
RBA Governor Lowe: depreciation in the Australian Dollar is helping the economy.

Earlier comments:

We are prepared to cut rates further to meet our inflation and employment goals.
Having cut rates twice in quick succession. we thought it was appropriate to wait and asses developments.
Inflation still expected to pick up, but the date at which it is expected to be back at 2% has been pushed out again.
Over 2020, inflation is forecast to be a little under 2% and over 2021 it is expected to be a little above 2%.
Australian economy to grow 2.5% this year; downward revision reflects weak consumption growth.
There are signs the economy has reached a gentle turning point.
Inflation will be below target band for some time.
Probable we will have spare capacity in the labour market for some time yet.
Reasonable to expect an extended period of low rates.

FX implications:

Should weigh on AUD, but we are seeing quite the opposite. all the odds are stacked against the Aussie yet it is 0.15% up in the Asian shift and holding around the 200- hourly moving average.

Note: Later in the day, the RBA also releases its quarterly Statement on Monetary Policy at 11:30am Syd.

"Tuesday’s brief statement indicated fairly modest changes compared to May. The RBA’s “central scenario is for the Australian economy to grow by around 2½ per cent over 2019 and 2¾ per cent over 2020.” Inflation is expected to take longer to return to target, “a little under 2 per cent over 2020 and a little above 2 per cent over 2021," analysts at Westpac explained

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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