Australia's central bank gov plays down housing risks
By Swati Pandey and Wayne Cole
SYDNEY, Sept 4 (Reuters) - Australia's top central banker
played down recent increases in mortgage rates by domestic
lenders but highlighted global risks to growth including a
possible escalation of trade disputes and economic strains in
The Reserve Bank of Australia (RBA) was also watching out
for a material lift in U.S. inflation which could force the
Federal Reserve to tighten policy at a faster pace, Governor
Philip Lowe said in a speech in Perth.
Lowe was speaking at the RBA Board dinner in Perth after
earlier announcing the benchmark cash rate was on hold at an
all-time low 1.50 percent at its September board meeting.
He emphasised the need for policy to remain accommodative as
the central bank awaits a revival in wage growth and inflation,
which has undershot its 2-3 percent target for more than two
years. Wage growth, on the other hand, is crawling near its
slowest pace on record despite a strong jobs market.
"Many business people that I speak to recognise that a
pick-up in overall wages growth would be a positive development
from a macro perspective, although not from the perspective of
their individual business," Lowe said.
"So there is a tension there," he added.
"Our expectation is that wages growth will pick up from
here, but the pick-up is likely to be only gradual."
Lowe has remained patient on policy since taking over the
reins at the RBA in September 2016. The central bank last cut
rates in August of that year and has since stayed on the
He signalled the next move was going to be an increase,
albeit not for some time.
The RBA has one eye on the country's housing markets as
tighter credit conditions take the heat off the once-booming
sector, Lowe said without sounding alarmed about the trend.
He noted the recent increase in mortgage rates by banks in
response to higher funding costs, but again played down its
effects on the market.
Last week, Australia's No.2 lender Westpac raised mortgage
rates, a move considered by many as a defacto tightening in the
But Lowe disagreed.
"A much less remarked upon fact is that the average mortgage
rate paid in Australia has fallen since August last year, as
lenders have increased their discounts," he said
"I encourage anyone with a mortgage to shop around: there
are some very good offerings out there."
(Reporting by Swati Pandey
Editing by Shri Navaratnam)
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