Prepared remarks from RBA Gov. Lowe
- It is too early to declare victory on inflation, but things are moving in the right direction.
- The board is mindful that interest rates have been increased by a large amount in a short period of time and that there are lags in the operation of policy.
- The board remains resolute in its determination to return inflation to the 2-3 per cent target range.
- Monetary policy is in restrictive territory and it is working to establish a better balance between supply and demand.
- Our central forecast is for CPI inflation to be around 31/4 per cent by the end of next year and to be back within the 2-3 per cent target range by late 2025.
- It is possible that some further tightening of monetary policy will be required to ensure that inflation returns to target within a reasonable timeframe.
- Recent data indicate that there has been some easing in the labour market.
- Whether or not this is the case will depend upon the data and the board's evolving assessment of the outlook and risks.
- We expect employment to continue to grow, but below the rate of growth in the labour force.
- It's encouraging that the recent data are consistent with inflation returning to target over the next couple of years.
- The Australian economy is currently experiencing a period of below-trend growth and this is expected to continue for a while yet.
- Data are also consistent with the Australian economy continuing to travel along that narrow path that I have spoken about.
- The bank’s central scenario is that economic growth remains subdued for the rest of this year before gradually picking up to around 2 1/4 per cent by end 2025.
- Dwelling investment is expected to increase again next year, after the recent difficulties in that sector.
- Monetary policy is in restrictive territory.
- Possible that some further tightening of monetary policy will be required.
- Board is seeking to establish a credible path back to the inflation target over the next couple of years.
- Board wants to have reasonable confidence that inflation will return to target over the current forecast period.
- It is a complicated picture and there are scenarios in which consumption is weaker than our central case and others in which it is stronger.
- Risk that services price inflation may stay high, prolonging the period of inflation being above target.
- Board is seeking to establish a credible path back to the inflation target over the next couple of years to avoid a damaging shift in inflation expectations.
The AUDUSD is trading in a very narrow trading range so far today. The range is only 5 pips. The average over the last 22 days (around a month) is 74 pips. The low today is holding onto the low from last week at 0.65136
