The Reserve Bank’s minutes from its December monetary policy meeting show the central bank sticking to the line that it won’t lift rates until it sees stronger wages growth.
The RBA did drop any specific reference to 2023 or 2024 as likely to be the years by which it expects macro-economic conditions to meet its criteria for an interest rate increase.
“The board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range” the minutes said. “This will require the labour market to be tight enough to generate wages growth that is materially higher than it is currently. This is likely to take some time and the board is prepared to be patient.”
The central bank also warned of the impact of omicron for travel services and additional volatility in financial markets.
“However, the near-term outlook for travel services had been clouded by the emergence of the omicron variant of COVID-19, as there was some risk that it would give rise to renewed restrictions or travel hesitancy,” its statement said.
“Members commenced their discussion of international financial markets by noting that bond yields and equity prices had declined globally and become more volatile, as the identification of the omicron variant of COVID-19 saw some renewed restrictions and increased uncertainty about the global economic outlook.”
Be the first to comment