RBA Gov. Lowe says more rate hikes are coming, but no preset path

Reserve Bank of Australia Governor Lowe is speaking:

• to the Anika Foundation
• topic is "Inflation and the Monetary Policy Framework"

Earlier this week the Bank raised its cash rate target again. Rate hikes ahead are likely to slow somewhat:

• RBA plays it straight, hints that rates are now in neutral territory

--

Speech headlines via Reuters:

• says further rate rises will be required but not on a pre-set path
• conscious of lags in operation of monetary policy and that rates have risen very quickly
• case for slower pace of rate hikes becomes stronger as the level of the cash rate rises
• but how high rates need to go and how quickly will be guided by data, outlook for inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term and labour market
• price stability necessary for a strong economy, sustained full employment
• sharp global slowdown would make it harder to achieve soft landing in australia
• recent data continue to suggest resilience in Australian consumer spending
• inflation expectations remain consistent with the inflation target
• a shift higher in inflation expectations will require higher interest rates
• in our national interest that we avoid this shift
• aggregate growth in wages has not yet responded materially to higher inflation
• flexible inflation targeting has served australia well, remains best monetary policy regime
• do not see a strong case for a move away from this broad approach
• worth examining arguments for and against a change to the 2-3% target range
• important we learn from our forecast mistakes on inflation

--

Full text:

Inflation and the Monetary Policy Framework

---

AUD fell a few points on the headlines. Bond yields dipped back a little also.

I think there is something for the hawks and the doves in those bullet points above.

Dovey:

• case for slower pace of rate hikes becomes stronger as the level of the cash rate rises

Hawkey:

• how high rates need to go and how quickly will be guided by data, outlook for inflation and labour market

--

There will be a Q&A to follow.