MNI BRIEF: Patience On Inflation Risks, Employment-RBA's Lowe

It is too early for the Reserve Bank of Australia to assume that inflation is sustainably within the target range and the central bank was prepared to be patient before tightening monetary policy, RBA Governor Philip Lowe said on Friday.

In a speech before questions from a parliamentary committee, Lowe said that although underlying inflation – at 2.6% - was at the midpoint of the RBA’s 2% to 3% target range, this was the first time inflation had been at this point for seven years and it was not clear how the data would develop in the shorter term.

“In these circumstances, the Board is prepared to be patient,” Lowe said.

“I recognise that there is a risk to waiting but there is also a risk to moving too early. Over the period ahead we have the opportunity to secure a lower rate of unemployment than was thought possible just a short while ago. Moving too early could put this at risk.”

The next data point of relevance to the RBA outlook will come on Feb. 23, when data on wages growth – currently running at 2.2% - is released for the last quarter of 2021.