Nothing New From Governor Lowe At First Glance

There was nothing in the way of fresh information of note in Governor Lowe's address, with the conclusion reading as follows:

• For inflation to be sustainably in the 2 to 3 per cent range, it is likely that wage growth will need to exceed 3 per cent. That is on the basis that labour productivity continues to increase and that the labour share of national income remains broadly steady. The current rate of wage growth is materially less than 3 per cent. Partly for the reasons I have discussed, we still expect the lift in aggregate wages growth will be gradual. We also expect that it will take until 2024 for inflation to be sustainably within the 2 to 3 per cent target range.
• I would like to close by reiterating the 2 points I made earlier in the week.
• The first is that the condition for an increase in the cash rate depends upon the data, not the date; it is based on inflation outcomes, not the calendar.
• The second is that the step-down in the RBA's bond purchases from $5 billion to $4 billion a week does not represent a withdrawal of support by the RBA. The evidence is that central bank bond purchases have their impact through the total stock of bonds purchased, not the flow of those purchases. By mid November, our cumulative purchases under the bond purchase program will have amounted to $237 billion. We will hold a little more than 30 per cent of Australian government bonds on issue and 15 per cent of state and territory bonds. This represents a substantial and ongoing degree of support to the Australian economy. The adjustment in the rate of weekly purchases does not change this.
• Full text.
• Focus now moves to the Q&A session that will follow the address.