Interest Rates To Rise Gradually – RBA’s Lowe (Australia)
The economic outlook for Australia appears considerably brighter than that for the other advanced economies and it is likely that interest rates will need to continue their gradual move towards “more normal levels”, Reserve Bank of Australia assistant governor Philip Lowe said on Thursday.
“With the economy having relatively limited spare capacity, it is likely that interest rates will need to continue their gradual move towards more normal levels,” he said at an event in Sydney.
Lowe said that he expects to see Asian economies continuing to grow solidly in the months ahead, but expects growth in the advanced economies to remain subdued.
While there are risks surrounding the outlook of this scenario, Lowe said it would be unwise of the central bank to delay policy action.
“Waiting to see how the myriad of risks evolves before adjusting policy runs the significant downside of moving too late, particularly given that the economy is starting this upswing with less spare capacity than in previous upswings,” he said.
Australia was the first major economy to raise interest rates in the aftermath of the global financial crisis.
Since October, the RBA has raised its benchmark rate by 100 basis points to 4.00%, including a quarter percentage point move earlier this month.