MNI BRIEF: RBA Patient On Rates, But 2022 Rise "Plausible"

Reserve Bank of Australia Governor Philip Lowe said on Wednesday said that it is still “plausible” that rates will rise this year, even as a patient approach was outlined in the latest policy review this week.

Responding to questions at the National Press Club in Canberra, Lowe said that because underlying inflation – at 2.6% - was “not high at the moment”, the RBA had time to see how market uncertainties played out this year, see: MNI STATE OF PLAY: RBA Stays Firm On Cash Rate View, Drops QE.

"If they resolve in one way, then we'll raise rates, if they resolve in another way it is still plausible that the first increase in interest rates is a year or longer away," he said. "If things go well, and the economy performs strongly, then there are clearly scenarios where we would be increasing rates later this year if some of the uncertainties are resolved."

Lowe said the RBA had never said that it would not raise rates from the current record low of 0.10% until 2024. “It was not a promise, it was a probabilistic statement,” he said, which had been based on economic forecasts which changed over time.