MNI BRIEF: No Target For AUD, Says RBA Governor Lowe

The Reserve Bank of Australia does not have a target level for the exchange rate, while the 2 to 3% inflation target is reviewed whenever there is a change of government or central bank governor, according to remarks by RBA Governor Philip Lowe on Friday

In a speech to the Universidad De Chile Conference on Central Bank Independence, Mandates and Policies, Lowe said he believed the arrangement on inflation "enhances the credibility of the monetary regime" and demonstrated the target was owned by the government and the RBA but was also flexible.

Lowe said that adding an exchange rate objective to the RBA mandate would compromise other objectives and "produce, on average, poorer results." He noted, however that the RBA would intervene if market liquidity deteriorated, or if the exchange rate "has moved a long way from fundamentals, with damaging consequences for the overall economy."

The last time the RBA intervened in foreign exchange markets was during the global financial crisis more than 13 years ago.