SYDNEY – Australia's central bank will not raise interest rates from record lows in 2022, but an increase the following year is now “plausible”, the bank's governor said today.
The Reserve Bank of Australia (RBA) kept borrowing costs on hold at 0.1% at a regular policy meeting but dropped a bond yield target, signalling rates could now rise earlier than the previously expected 2024.
It comes as other central banks across the globe have recently tightened policy to cool soaring prices and still more are considering following suit.
RBA governor Philip Lowe said a rate hike was now “plausible” in 2023, after inflation picked up but remained low at 2.1%.
The bank now expects inflation to grow gradually before reaching 2.5% in 2023, which is still within its inflation target of 2-3%.
“On the issue of timing, the latest data and forecasts do not warrant an increase in the cash rate in 2022,” Lowe told an online briefing.
I recognise that some other central banks are raising rates, but our situation is different.”
Central banks in Brazil, Singapore, South Korea, and New Zealand have all increased borrowing costs recently.
Lowe said Australia's economy was bouncing back “relatively quickly” after a Delta variant outbreak plunged its two biggest cities, Sydney and Melbourne, into protracted lockdowns.
The RBA has predicted the country's economy will expand by about 5.5% next year and around 2.5% in 2023.
The bank plans to continue an Aus$4 billion (US$2.9 billion, RM12.4 billion) per week bond-buying programme until at least February 2022, when the stimulus measure will be reviewed. – AFP, November 2, 2021
