MNI BRIEF: RBA's Lowe Says Policy Lag May Be Longer

Reserve Bank of Australia Governor Philip Lowe says a high proportion of fixed rate loans and AUD250 billion of savings may delay the impact of the most aggressive tightening campaign in three decades, in a question and answer session following a speech on Tuesday night.

The comments came after a speech that warned that supply side challenges will complicate policymaking by producing more variability in inflation. Lowe, in a speech delivered after the local market close, said supply side issues were "rectifying". (See MNI: RBA's Lowe Says Narrow Inflation Targeting Getting Harder)

"What we want people to understand is that over time inflation in Australia will average 2 point something but it will vary. And when it varies it isn't a policy failure, that is a result of the world we live in," he said. "But when it does vary, I want you all to be very confident that we will take the action that is necessary to get it to come back and our job will be easier if people believe us."