Markets in the Asian session saw the publication of a report of the minutes of the Australian Central Bank (RBA) meeting and a speech by Governor Philip Lowe which continued to offer a ‘dovish tone’ to the country’s monetary policy.
According to the minutes of the RBA meeting for the November edition showed that policymakers acknowledged the risk of inflation was increasing following the shocking data in the third quarter published recently.
Core inflation has risen to 2.1%, returning to the RBA’s 2-3% target range for the first time in six years in contrast to the central bank’s previous forecast that it will not be achieved until 2023.
Even so, policymakers still think that interest rate hikes will be maintained until 2024 or until the criteria in wage growth and inflation are met.
Meanwhile, in Governor Philip Lowe’s latest speech today, he said that the economy and inflation need to change significantly for policymakers to consider rate hikes next year.
Lowe said Australia's wage growth needed to rise to 3% or more to keep inflation at the central bank's 2-3% target, adding that it was not the only determinant of prices and policy changes.
Instead, they will use growth as a guide to assess progress towards achieving the target and whether inflation will continue to be within the target range.
The Aussie dollar is seen as less impressed with the news as investors are already aware of the RBA’s dovish stance following the decision of the central bank’s policy meeting earlier this month which kept interest rates and bond purchases unchanged.
