Philip Lowe in his first speech as Reserve Bank of Australia's Governor reinforced the flexible nature of the RBA’s inflation target while emphasizing that the Bank continues to expect inflation to stay low.
Lowe noted that labour market underutilization rate remains high by historical standards, commodity prices are down around 50 percent, and increased competition in the retail sector have added to perceptions of a lack of pricing power. He added that pricing power is unlikely to turn around quickly given the increasingly globalised nature of the world economy. Lowe reiterated that the RBA still expects inflation to remain close to the bottom of the target band until the end of 2018.
The Australian government publishes official Consumer Price Inflation (CPI) data every quarter, and Q3 CPI data is due for release on October 26th. Inflation is a key consideration when it comes to the outlook for Reserve Bank of Australia's (RBA) monetary policy.
"With inflation set to stay low for an extended period, we believe the RBA holds an easing bias tempered by concerns over financial stability," said ANZ in a report.
