"Economy and inflation would have to turn out very differently for the board to consider a hike next year," the Reserve Bank of Australia (RBA) Governor Phillip Lowe said in a speech titled "Recent Trends in Inflation" at the Australian Business Economists Webinar on Tuesday.
Latest data, forecasts do not warrant a rate rise in 2022.
Still plausible first increase in the cash rate will not be before 2024.
Could be case for hike before 2024 if inflation rises faster than expected.
Underlying inflation at 2.5% mid-point would not warrant a rate rise.
Need to see underlying inflation well within 2–3% range, confident it will stay there.
A sharp rise in underlying inflation would have different policy implications to a slow drift up.
Yet to see a broad-based pickup in wages growth in Australia.
Our business liaison suggests most retain a strong cost control mindset.
Energy prices in Australia trending lower due to wind, solar capacity.
Likely global inflation pressures will moderate over next 18 months as demand/supply adjusts.
In a knee-jerk reaction to these comments, AUD/USD spiked to daily highs of 0.7369 before retreating to 0.7358.
At the time of writing, the aussie is trading at 0.7365, up 0.31% on the day.
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