RBA’s Lowe: Step-down in bond buying does not represent a withdrawal of support

“Step-down in bond buying does not represent a withdrawal of support by the Reserve Bank of Australia (RBA),” the central bank Governor Phillip Lowe said while speaking about the labor market and monetary policy at a webinar hosted by the Economic Society of Australia on Thursday.

Additional quotes

“Condition for rate increase depends upon inflation outcomes, not the date.”

“Expect it will take until 2024 for inflation to be sustainably within 2-3% range.”

“Likely wage growth will need to exceed 3% to get inflation in the target range.”

“Unemployment will need to be sustained in low 4s to be considered full employment.”

“Recovery of the Australian labor market this year has been remarkable.”

“Positive surprises on jobs not matched with equivalent surprises on wages and prices.”

“Most firms retain a strong focus on cost control, rather than raising wages.”

“Plausible scenario is that borders open gradually over the period ahead.”

“Extended border closure could see wage pressures build further in some sectors.”

“Watching Sydney lockdown carefully, but expect the economy to rebound quickly once over.”

Market reaction

 AUD/USD remains under pressure near 0.7450 on RBA Governor Lowe’s comments, heading towards multi-month lows of 0.7445. At the press time, the aussie is trading at 0.7456, down 0.35% on the day.