Interest Rate Hike Unlikely To Occur Before 2024
Reserve Bank of Australia governor Philip Lowe has ruled out an early rate increase, but said he would be concerned if lending standards deteriorate and people borrow “ridiculous amounts” as house prices rise.
Mr Lowe made it clear that the next rate move in Australia was still unlikely to occur before 2024.
He said the Australian economy was recovering from the pandemic but the journey back to full employment and inflation sustainably within the RBA’s 2-3% target range was likely to be a long one.
“Our judgment is that we are unlikely to see wages growth consistent with the inflation target before 2024,” Mr Lowe said.
“This is the basis for our assessment that the cash rate is very likely to remain at its current level until at least 2024.”
Asked about suggestions the central bank should be doing more quantitative easing, Mr Lowe noted the RBA was providing $400 billion in stimulus through its bond buying program and its term funding facility, a source of low-cost funding to banks.
“If it turns out that we need to do more, we can, but I think right at the moment we’re doing a huge amount and it’s appropriate to watch and wait and see how that plays out.”