MNI BRIEF: RBA Will Hike If Needed - Gov Bullock
MNI (MELBOURNE) - Reserve Bank of Australia Governor Michele Bullock has stressed the board could still hike rates should inflation not continue to moderate.
Speaking at an industry conference, Bullock noted the Reserve is still aiming to lower demand to match supply without pushing the economy into recession. "Unlike some other countries, where they now have a negative output gap, in effect... we're trying to do something which means managing down the excess demand to a point where it's just in line with supply and that's the way we're trying to balance the two objectives," she said, pointing to the RBA’s dual labour and price mandate. (See MNI: RBA Labour Market Rethink Seen Making Cuts More Distant)
Bullock noted other countries that hiked rates higher had experienced sharper increases to unemployment. “We are somehow trying to manage this process to keep enough restriction in to bring demand down, but not to the extent that it ends up in over supply,” she added. “There's no scientific way of doing this, but we're attentive to both. Having said that, if inflation doesn't come down, then it might be that the best medicine is, in fact, that we have to end up putting more restriction into the economy.”