RBA’s Lowe: Further rate rises will be required but not on a pre-set path

The Reserve Bank of Australia (RBA) Governor Philip Lowe is speaking about the economic outlook and monetary policy at the Anika Foundation Fundraiser, in Sydney.

Key quotes

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 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