Australia central bank chief: no rate hike till low inflation returns to 2-3% target mid-point
SYDNEY, NNA – The Reserve Bank of Australia is unlikely to consider raising interest rates until it has conviction that low inflation will comfortably return to its target range of 2% to 3%, RBA Governor Philip Lowe said Thursday.
The central bank chief also said the RBA’s policy board stands ready to “provide additional support by easing monetary policy further” if demand growth is not sufficient.
“Whether or not further monetary easing is needed, it is reasonable to expect an extended period of low interest rates,” he said in a speech. “On current projections, it will be some time before inflation is comfortably back within the target range.”
The central bank’s policy board is “strongly committed” to reflating the economy, he said.
“It is highly unlikely that we will be contemplating higher interest rates until we are confident that inflation will return to around the midpoint of the target range,” Lowe said.
Low inflation has become the norm in the advanced economies. Currently, most have an inflation rate below 2 percent, with a few below 1 percent, the governor noted.
In Australia, headline inflation has been mostly below 2 percent over the past four years, and in underlying terms, inflation has been below the target range for three years, he said.