- Rise in inflation does not require an immediate response
- Paying attention to broader measures of labor costs that just the wage price index
- Says they're not hanging on every wage price number
- Remains to be seen if rates will rise this year
- Not surprising that faster progress on economy would bring forward timing of rate hike
- There are scenarios where rates would rise this year
- It's still plausible that first rate hike is a year or longer away
- Unlikely that we will have to tighten aggressively to control inflation
- Solution to high housing prices is not to put up interest rates
- High debt means household sector will be responsive to higher rates
Lowe sounds like a guy who is in no rush to hike. That's a significant difference from market pricing.
The way I'm thinking about this is that there are universal factors at work here. There's no way the Fed will hike this year and the RBA stand pat. One of them will be wrong but -- more importantly -- there will be some convergence.
