RBA governor says remains to be seen if more work to be done on monetary policy

AUSTRALIA’S central bank governor Philip Lowe said on Wednesday (Jul 12) it remains to be determined whether there is more work to be done on monetary policy, but it is possible that some further tightening will be required to bring inflation to heel.

Speaking in Brisbane, Lowe said there has been a “significant and rapid” tightening of monetary policy, and the rate-setting policy board is very conscious that policy operates with a lag and full effects have yet to be felt.

The Reserve Bank of Australia (RBA) has raised interest rates by a whopping 400 basis points to an 11-year high of 4.1 per cent, the most aggressive tightening campaign in its modern history, and markets suspect it may have to hike two more times to tame inflation.

After a review commissioned by the government recommended sweeping changes to the decades-old institution, Lowe said the board has decided to take up some of the recommendations.

From 2024, the RBA Board will meet eight times a year, compared with 11 times currently, said Lowe, adding that the governor will hold a press conference after the policy meeting to explain the decision.

Quarterly statements on monetary policy, which includes the bank’s economic forecasts, will be released as the same time as the policy decision, according to Lowe. REUTERS