In a speech delivered today, RBA Governor Philip Lowe said the central bank will consider the case for cutting interests in the upcoming meeting in two weeks’ time n June. After weak inflation reading and surge in unemployment rate in Q1, RBA might pull ahead the anticipated rate cut(s) for the second half.
Lowe said “accumulating evidence is that the Australian economy can support an unemployment rate of below 5 per cent without raising inflation concerns”. Such judgement is also “consistent with the experience overseas”. Meanwhile, recent flow of data suggests it’s “less likely” that “current policy settings are sufficient to deliver lower unemployment.”
There are few options ahead to lower unemployment rate. These include further monetary easing, additional fiscal support and structure policy changes. But he emphasized “relying on just one type of policy has limitations, so each of these is worth thinking about.”
Lowe concluded the speech noting: “A lower cash rate would support employment growth and bring forward the time when inflation is consistent with the target. Given this assessment, at our meeting in two weeks’ time, we will consider the case for lower interest rates.”
Lowe’s full speech The Economic Outlook and Monetary Policy.
Some readings on RBA minutes released today too:
AUD/USD dips notably today but stays above 0.6864 temporary low so far. Nevertheless, with 0.6988 resistance intact, near term outlook remains bearish. Further decline should be seen ahead to 161.8% projection of 0.7295 to 0.7003 from 0.7205 at 0.6733, which is close to 0.6722 low.