Reserve Bank of Australia Governor Lowe speech topic is: The Labour Market and Spare Capacity
- says possibility of lower interest rates remains on the table
- "not unrealistic" to expect a further reduction in the cash rate
- "unrealistic" to think one 1/4 point rate cut can alter growth path
- lower rates to help through effect on AUD, disposable incomes and financing costs
- recent data suggest we are not making any inroads into economy's spare capacity
- important to recognise monetary policy is not the only option
- options include fiscal and infrastructure spending, structural reform
- economy can sustain faster jobs growth, lower unemployment rate than previously
- considerable spare capacity in labour market, despite strong jobs growth
- remains short of full employment, need jobless rate around 4.5%
- underutilisation rate around 8.1%, shows more spare capacity than unemployment alone
- rise in participation is positive, but one reason for subdued wage growth
Lowe is being his usual confusing self:
- "unrealistic" to think one 1/4 point rate cut can alter growth path
- "not unrealistic" to expect a further reduction in the cash rate
- possibility of lower interest rates remains on the table
Cutting through the nonsense - more cuts coming. The July meeting is on Tuesday the 2nd. It is very much live. Check out the bit I bolded. The RBA is way behind the curve, they cut rates in June about a year too late.
The RBA has told us they are watching the labour market for cues on cuts. From those comments (highlights from his speech via Reuters) there are more imminent. the RBA has also said, repeatedly, they'd like to see further fiscal stimulus from the government (a reminder for those that need it, the RBA do not have a say in fiscal matters).
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