Reserve Bank governor Philip Lowe says the RBA does not expect to increase the official cash rate for at least three years. He says the board has changed its view on the timing of a future rate rise in relation to its inflation and full employment settings.
“We do not expect to be increasing the cash rate for at least three years,” he says.
Speaking at Citi’s 12th Annual Australia and New Zealand Investment Conference,, Lowe said: “Over recent months, our communication has stated that the Board will ‘not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3% target band’.
“In terms of inflation, our forward guidance has been forward looking … In today’s world, things are much less certain. So we will now be putting a greater weight on actual, not forecast, inflation in our decision-making.
“In terms of unemployment, we want to see more than just ‘progress towards full employment’.
The RBA governor says the policy response to the pandemic has been central to getting the Australian economy through the past six months in better shape than the economies of many other countries.