The Reserve Bank of Australia (RBA) Governor Phillip Lowe is on the wires now, via Reuters, making a scheduled speech titled “Productivity, Wages, and Prosperity” at an Australian Industry Group event, in Melbourne.
Key Comments:
Likely next move in rates is up not down, but not in near term
Any increase in interest rates still some time away.
No strong case for a near-term adjustment in monetary policy.
If economic growth is sustained, next move in rates will be up, not down.
March qtr GDP data “bit stronger than we were expecting”, consistent with the central scenario.
Despite strong GDP growth, no net increase in labor productivity over past two yrs.
Paying close attention to household finances, carefully watching consumption growth
Low wage growth leading to weak inflation in Australia, diminishing a sense of shared prosperity.
“Some pick-up” in wages growth would be a welcome development.
A return to wage increases of 3 pct or more “both possible and desirable”.
Liaison program suggests faster wage growth in areas of capacity constraints.
Risk of a trade war, political development in Italy tail risks for global growth.
Increasing strains in emerging markets of Argentina, Brazil, Turkey another potential source of financial shock.
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