Reserve Bank of Australia Deputy Governot Hauser, speaking at an Economic Society of Australia (QLD) event:
- Economic forecasts are subject to huge uncertainty.
- Assume inflation stickiness due to weaker supply, labour market tightness.
- But spare capacity could easily be much higher, or much lower than we assume.
- Assume unemployment will rise only slowly, but risk of faster increase.
- Assume household consumption to rise in line with real incomes.
- Risk consumption could rise more strongly, in part due to increase in wealth.
- Uncertain how far and fast savings rate might rise.
So many uncertainties mentioned its not really giving much insight into any potential move, or timing of such a move, by the Reserve Bank of Australia.
While its understandable that the Bank takes account of uncertainties, these comments above are in stark contrast to those from then Governor Lowe back in late 2021 when he confidently asserted there would be no rate rises until 2024 at the earliest (the first hike came in May 2022). Obviously there have been changes in personnel and responsibilities at the RBA since then. Maybe that’s just as well.