RBA’s Lowe: Goal is to get inflation back to target range within a reasonable timeframe

  • Some further tightening may be required to meet that objective
  • We will do what is necessary to bring inflation back to target
  • We are not on a pre-set course
  • Paying attention to consumption, inflation, jobs, global economic developments
  • Australian dollar had responded to change in rates outlook since April pause

That last point is subtle but perhaps it warrants more attention.

If the RBA had paused today and the Fed hikes tomorrow, it would result in the widest spread between Australia and US interest rates ever in favour of the latter. The prospect of that could lead to an even weaker aussie, which would not help with the inflation battle, and make that a tougher job for the RBA.

AUD/USD remains little changed amid the above remarks, still holding at 1% gains around 0.6695 currently.

This article was written by Justin Low at www.forexlive.com.

Go to Forexlive

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