“Main downside risks are new delta outbreaks, new strains of virus,” said Reserve Bank of Australia (RBA) Governor Philip Lowe during early Tuesday.
The RBA Boss spoke on the topic “Delta, the Economy and Monetary Policy” at an online event hosted by Anika Foundation.
Key quotes (from Reuters)
Cash rate unlikely to rise before 2024 given sluggish wage growth.
Rates might rise in other countries but domesitc factors different.
Board judged fiscal policy best response to current delta lockdowns.
Little monetary policy could do to offset hit to demand in Q3 and Q4.
Extension in bond buying to February reflected delayed recovery.
Outbreak is a significant setback, an added element of uncertainty.
Q3 gdp likely to shrink by at least 2%, risk contraction could be significantly larger.
Unemployment rate could reach "high fives" percentage, hours worked fall 3-4% in Q3.
Expects economy to be growing again in Q4, recovery continuing into 2022.
Spending to be supported by higher savings, boost to household wealth from house prices.
Low interest rates contributing to higher house pricies.
Housing affordability best not addressed by higher rates or curbs on leniding.
Australia has made significant progress on the vaccination front.
Main downside risks are new delta outbreaks, new strains of virus.
Delta outbreak has delayed, not derailed economic recovery.
AUD/USD drops 15 pip after the comments
Following the news, AUD/USD refreshed intraday low to 0.7354, down 0.07% intrady around 0.7363 by the press time.
Read: AUD/USD Price Analysis: Mildly offered around 0.7350 inside short-term EMA envelope
Additional comments
Getting faster wage growth would benefit everyone in Australia.
Not going to raise cash rate until inflation in 2-3% range.
Expect to taper bond buying and stop before raise cash rate.
Cannot continue buying bonds forever.
Likely to stop buying bonds sometime next year.
Has learned not to forecast AUD, not counting on the currency to drive the recovery.
Read: AUD/USD slips back towards 0.7350 as RBA’s Lowe speaks, focus on US inflation
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds steady near 1.0650 amid risk reset
EUR/USD is holding onto its recovery mode near 1.0650 in European trading on Friday. A recovery in risk sentiment is helping the pair, as the safe-haven US Dollar pares gains. Earlier today, reports of an Israeli strike inside Iran spooked markets.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD is rebounding toward 1.2450 in early Europe on Friday, having tested 1.2400 after the UK Retail Sales volumes stagnated again in March, The pair recovers in tandem with risk sentiment, as traders take account of the likely Israel's missile strikes on Iran.
Gold: Middle East war fears spark fresh XAU/USD rally, will it sustain?
Gold price is trading close to $2,400 early Friday, reversing from a fresh five-day high reached at $2,418 earlier in the Asian session. Despite the pullback, Gold price remains on track to book the fifth weekly gain in a row.
Bitcoin Price Outlook: All eyes on BTC as CNN calls halving the ‘World Cup for Bitcoin’
Bitcoin price remains the focus of traders and investors ahead of the halving, which is an important event expected to kick off the next bull market. Amid conflicting forecasts from analysts, an international media site has lauded the halving and what it means for the industry.
Geopolitics once again take centre stage, as UK Retail Sales wither
Nearly a week to the day when Iran sent drones and missiles into Israel, Israel has retaliated and sent a missile into Iran. The initial reports caused a large uptick in the oil price.