Phillip Lowe is betting that Australia is more resilient to global inflation pressures than other countries. We’re about to find out if that’s true.
Australia is about to find out if it is once again really the lucky country and different to the rest of the developed world when it comes to inflation and interest rates., to take time to assess the impact of 10 consecutive rate rises worth a cumulative 3.5 percentage points.
On Wednesday, he also underlined that monetary policy was more “powerful” in Australia because most home borrowers were on variable rate mortgages that quickly adjusted to the RBA’s rate changes, compared with borrowers overseas who were typically on long-term fixed-rate loans. “The pause is in contrast to some other central banks that have continued to hike recently,” Bloxham says. “We see the RBA as putting a higher priority on delivering a soft economic landing than other central banks, which appear more focused on getting inflation down more quickly, even if it means a recession.”
“You don’t just smoothly ski down from the peak of inflation,” Holden says. “The longer it takes, the more painful it is because it erodes people’s income and savings.”He admits that Australia may be somewhat different to the US, because of a relatively lower – although still very large – fiscal stimulus compared with the US during the pandemic.
“It is increasingly clear that the higher interest rates are having an impact on aggregate household spending,” Lowe says. Goldman Sachs economist Andrew Boak expects the RBA to wait for the Fair Work Commission’s decision on minimum and award wages in June, before resuming rate increases in July and August to take the terminal cash rate to 4.1 per cent.
“Accordingly, it will continue to pay close attention to both the evolution of labour costs and the price-setting behaviour of firms.”
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Australian banks remain ‘well-positioned’ amid overseas issues: RBA Governor Philip LoweReserve Bank Governor Philip Lowe says the impact of the recent bank issues has been limited in Australia as our banks remain “well-positioned” to provide the credit and financial services for the country. “Here in Australia the impact of the recent banking problems overseas has been limited, our financial markets are working well and Australia’s banks remain well-positioned to provide the credit and the other financial services the economy needs,” Mr Lowe said at the National Press Club of Australia conference on Wednesday.
Read more »
Reserve Bank boss Philip Lowe defends interest rate hikes, says more are likelyA day after the Reserve Bank's run of interest rate rises was paused, the bank's governor has suggested there will be more increases to come.
Read more »
RBA boss Lowe says pause 'does not imply that interest rate increases are over'The Reserve Bank boss warns households to brace for more interest rate rises, especially if businesses keep putting up prices or workers demand bigger pay rises.
Read more »
‘Way too early’ to discuss rate cuts: LoweRBA governor Philip Lowe says the central bank’s board is more likely to raise the cash rate than lower it at future meetings.
Read more »
‘Way too early’ to discuss rate cuts: LoweRBA governor Philip Lowe says the central bank’s board is more likely to raise the cash rate than lower it at future meetings
Read more »
The RBA has frozen interest rates but there's plenty of pain to come — as well as a moment of truth for Philip LoweMore than one million borrowers are set to come off ultra-low fixed mortgage rates this year and next, meaning the full effect of the 10 rate rises to date is yet to be felt, writes Peter Martin.
Read more »