RBA’s Lowe: More Policy Tightening Likely

Reserve Bank of Australia Governor Philip Lowe said today that despite keeping interest rates unchanged at the last meeting, it is “likely” to raise interest rates further.
It was unclear whether more had to be done, with Lowe saying “some further tightening measures may be required in order to bring inflation back to target within a reasonable time frame.”
“The committee considered it appropriate to hold rates steady this month and revisit the situation next month, after already raising rates substantially.”
Lowe said the last few rate hikes in May and June were likely to be enough to offset a slew of worrying data suggesting the RBA may struggle to bring inflation back to its expected target by mid-2025.
He also spelled out “headwinds” affecting the outlook for inflation.
Rising rents, rising electricity prices, high unit labor costs (mainly due to slow productivity growth) and high capacity utilization are his top concerns, but several forces are working in the opposite direction, including supply chain normalization, a pullback in commodity prices, and slower growth in household consumption and overall demand.