RBA Lowe States Case For Slower Rate Hike Pace

The main initial focus on the RBA Lowe speech was on a headline that the central bank sees a case for slower rate hikes going forward.

*LOWE: CASE FOR SLOWER PACE OF HIKES GROWS AS CASH RATE RISES - BBG

This was in the context of a how quickly rates have risen, the level cash rate is now at, and the lags of how monetary policy operates. The RBA still expects to adjust the cash rate higher going forward.

• Lowe’s final section of the speech stated "But how high interest rates need to go and how quickly we get there will be guided by the incoming data and the evolving outlook for inflation and the labour market."
• So, further moves are very much data dependent, but it is opening the door to a slower pace of hikes compared to the 50bps hikes seen over the past few meetings.
• The A$ dipped under 0.6720 but is now stabilizing. We were last at 0.6730. Bond yields are down sharply, the 2yr -17bps to 2.85%, the 10yr by 15.5bps to 3.54%.