“We have scope to wait and see how the data develop and how some of the uncertainties are resolved,” said Reserve Bank of Australia (RBA) Governor Philip Lowe during a testimony at a virtual hearing before the House of Representatives Standing Committee on Economics on early Friday morning in Asia-Pacific region.
Key quotes
Estimate that GDP increased by around 5 percent over 2021 and are expecting GDP growth of around 4¼ per cent over 2022 and 2 percent over 2023.
Upswing in business investment is also under way.
The board is prepared to be patient.
Macroeconomic policy settings are supportive of growth.
We have scope to wait and see how the data develop and how some of the uncertainties are resolved.
I recognise that there is a risk to waiting but there is also a risk to moving too early.
Forward-looking indicators suggest further growth in jobs over the months ahead.
Moving too early could put employment goal at risk.
Main source of uncertainty about the outlook continues to be covid-19.
Stronger the economy and the more upward pressure on prices and wages, the stronger will be the case for an increase in interest rates.
Sharp pick-up in inflation in parts of the world, especially in the united states, has come as a surprise and is an additional source of uncertainty.
Too early to conclude that inflation is sustainably in the target range.
We expect a further lift in underlying inflation.
Further pick-up in overall wages growth is expected.
It is entirely possible that countries with higher inflation rates will need a bigger adjustment in interest rates than currently anticipated.
Official link to full statement
AUD/USD pays a little heed
AUD/USD keeps the latest pullback from three-week high following the downbeat statements from RBA’s Lowe. The risk barometer’s previous declines could be linked to the strong US inflation data.
Updates
After the release of initial prepared statement, RBA's Lowe answered some questions asked by the House of Representatives Standing Committee and uttered following words.
No evidence economy is over stimulated at moment
Going to wait until see evidence that inflation has picked up in sustainable way.
Hope over time real interest rates return to positive territory.
Would hope to get real interest rates above zero, and above 2.5% inflation.
Going to look at experience with forward guidance in policy review.
Broader labour costs rising faster than the wage price index.
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