RBA Gov. Lowe: A flexible inflation target remains correct policy

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    New Reserve Bank of Australia governor Philip Lowe, appearing before parliament's House of Representatives' Standing Committee on Economics 

    • RBA Gov. Lowe says our view is that a flexible medium-term inflation target remains the right monetary policy framework for Australia
    • Inflation is expected to remain low for some time, but then to gradually pick up as labour market conditions strengthen further
    • Says a flexible medium-term target is the best way for us to deliver low and stable inflation in a way that contributes to our other broad responsibilities
    • Housing situation is somewhat more comfortable than it was a year ago, although we continue to watch things carefully
    • We expect the economy to continue to be supported by low interest rates and the depreciation of the exchange rate since early 2013
    • Says recent GDP data a little above most estimates of trend growth in our economy
    • The economy is adjusting reasonably well to the unwinding of the biggest mining investment boom in more than a century
    • RBA board very conscious that rate cuts mean lower interest income for savers
    • Our judgement is that past easing in monetary policy is supporting jobs and economic activity
    • Story on income growth has been less positive, with growth in nominal GDP being disappointing
    • Recent news on commodity prices has been a bit more positive than it has been for a while
    • If these increases were to be sustained then we could look forward to the drag on national income from falling commodity prices coming to an end
    • Low wage growth and lower commodity prices have meant that CPI inflation has been quite low over recent times
    • Importantly, the drag from the fall in mining investment will come to an end
    • We expect the economy to continue to be supported by low interest rates and the depreciation of the exchange rate since early 2013

    Headlines via Reuters


    more to come


    Lowe has appeared before the committee before, in his role as deputy governor

    The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



    This article appears in: Investing , Forex


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