HomeLive CommentsRBA Lowe: Evenly balanced chance of hike or cut in next move

RBA Lowe: Evenly balanced chance of hike or cut in next move

Australian Dollar drops sharply after RBA Governor Philip Lowe dropped the rhetoric that the next move in interest rate is more likely a hike than a cut. Instead, he said the probabilities of hike and cut are now more “evenly balanced”.

Lowe delivered a speech “The Year Ahead” to the National Press Club of Australia today. Lowe maintained the view that ” tighter labour market and reduced spare capacity will see underlying inflation rise further towards the midpoint of the target range.” And given that, RBA “maintained a steady setting of monetary policy” yesterday.

However, he also noted given the uncertainties ” it is possible that the economy is softer than we expect, and that income and consumption growth disappoint.” In particular,  “in the event of a sustained increased in the unemployment rate and a lack of further progress towards the inflation objective, lower interest rates might be appropriate at some point.

Thus, on the scenarios of next-move-is-up and next-move-is-down, “the probabilities appear to be more evenly balanced.” Though Lowe also maintained that RBA “does not see a strong case for a near-term change in the cash rate”.

Lowe’s full speech here.

Featured Analysis

Learn Forex Trading