Lowe’s Glass Remains Half Full

Comments from RBA Governor Lowe have filtered out over the last hour or so (and have concluded), although there was nothing in the way of meaningful, fresh information for the market digest in the headlines.

• Governor Lowe noted that the Bank is monitoring the labour market for signals re: labour costs, while assessing the persistence of supply side issues. On inflation psychology he noted a need to monitor how pervasive shifts in that space are, given the fact that the RBA will not respond until there is evident of pervasive price pressures (even murkier language regarding rate lift off?). He also deemed it “quite unlikely” that the world gets stuck in a state of elevated inflation.
• He welcomed any review of the RBA (note this is not fresh information, we know a review will be taking place, irrespective of which party prevails in this year’s Federal Election)
• Lowe touched on fiscal matters flagging a need for Australia to chart a path to a lower debt/GDP ratio, while playing down the requirement to reach a budget surplus.
• He also played down worry re: any concerns that bank lending standards have weakened, while once again highlighting mortgage buffers that will be beneficial when interest rates do rise.
• Overall, he retained his glass half full view, by stressing that the Australian economy looks “pretty good.”