Financial News: Lowe Says RBA Closer To Pause Interest Rate

Lowe Says RBA Closer To Pause Interest Rate Hike

03/08/2023 - 01:54:00 (RTTNews)

(RTTNews) - Reserve Bank of Australia Governor Philip Lowe said the bank is closer to pause interest rate increases to assess the effects of the past rate hikes.

"With monetary policy now in restrictive territory, we are closer to the point where it will be appropriate to pause interest rate increases to allow more time to assess the state of the economy," the governor said at the keynote address to the Financial Review Business Summit, on Wednesday.

At what point it will be appropriate to pause interest rate will be determined by the data as well as the assessment of the outlook, Lowe added.

On March 7, the <a href=https://www.rttnews.com/3348719/australia-hikes-key-rate-to-near-11-year-high.aspx?refresh=1 target=_blank >RBA</a> had raised its key interest rate by a quarter-point to a more than 10-year high and signaled more tightening to combat high inflation.

The RBA has lifted its monetary policy by a cumulative 350 basis points since May 2022.

Lowe said the board discussed the effects of the past cumulative rate hikes and the difficulties faced by households due to higher interest rates.

Nonetheless, the governor said further tightening of policy is likely to be required to bring inflation back to the target within a reasonable timeframe. Inflation remains too high and while it looks to be on a declining path, it is likely to remain higher than target for a few years, he noted.

"If we don't get inflation down fairly soon, the end result will be even higher interest rates and more unemployment," said Lowe.

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