RBA: SoMP emphasized the patient stance – UOB

Friday’s RBA Statement on Monetary Policy (SoMP) reinforced the “patient” stance already seen at the RBA meeting and the subsequent speech by Governor P.Lowe, noted Lee Sue Ann, Economist at UOB Group.

Key Takeaways

“The Reserve Bank of Australia (RBA), at its first monetary policy meeting of the year earlier this week (1 Feb), announced that it will stop buying government bonds from 10 Feb, but stressed that the end to its Quantitative Easing (QE) does not imply a near-term interest rate rise.”

“In its Statement of Monetary Policy released earlier today, in addition to reiterating the statement, RBA Governor Philip Lowe also stated that it is too early to conclude inflation is sustainably within target range.”

“We still look for rate hikes only in 2023, though we now flag the potential risk for that to occur earlier than our projection. A pickup in wage growth will be a crucial factor. In this regard, the RBA is likely to continue to wait until wage growth is closer to 3%. The next RBA meeting is on 1 Mar.”