Reserve Bank Governor Glenn Stevens has reiterated that further interest rate hikes may be on the horizon.
In a speech to a Brisbane luncheon for the Economic Society of Australia, Stevens said the RBA expects inflation to continue to rise, and that further tightening of monetary policy could be necessary. However, Stevens may have taken a rate rise in July off the table, commenting that new data will be available late that month to help the RBA assess the level of inflation.
"New information will, as always, be important in our monthly assessments of what monetary policy needs to do. As far as prices are concerned, we will get another comprehensive round of data in late July," he remarked.
Stevens also defended Australia's multi-speed economy, saying that while the RBA recognises certain segments of the economy face hardship, the resources boom means a better overall economic position. Stevens claimed this filtered through to the broader economy in ways that are not always apparent.
"The average consumer in an advanced economy is effectively experiencing a decline in purchasing power over food, energy, and raw material-intensive manufactures. Australian consumers face this to some extent as well. Were Australia not a producer of raw materials, we would be experiencing a good deal more of it. In such a world, there would be no resources sector build up. Our currency would be much lower. We would be paying much more for petrol at the pump, for our daily coffee and for a wide range of other consumer products. We would not be holidaying overseas in our current numbers," Stevens said.
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