No Curve Balls From Lowe To Start

A very mundane start to RBA Governor Lowe's testimony, with a glass half-full approach clearly continuing to be at the fore of the RBA's thought process. A return to strong growth is expected next year. Lowe expresses optimism re: '22 & plays down worry re: a double-dip recession, although he pointed to a difficult few months ahead.

• Lowe suggested that fiscal policy is the more appropriate medium for providing support at present, although he did note that the Bank discussed a delay of its already announced tapering move at its August meeting. The Bank decided that a delay of the taper would not provide the immediate help that the economy requires.
• Still, Lowe stressed that the Bank is ready to act to respond to further bad news surrounding COVID.
• The language around the cash rate (doesn't see conditions for a hike until '24) and conditions required for a hike i.e. confidence surrounding inflation being well within the target band and that it will stay there, was in line with well-defined RBA guidance. Lowe also noted that it is now plausible that the RBA may hike rates within a 3-Year horizon. That is of course consistent with the aforementioned guidance and the Bank's choice to not roll its 3-Year yield target to ACGB Nov '24.