RBA Stevens said low inflation does not demand knee-jerk reaction

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Tuesday, May 24 2016

This morning RBA Governor Stevens was speaking at the Trans-Tasman Business Circle boardroom briefing. He said that he suspects there is quite some years of fiscal repair work for the government in the period ahead. It is true that inflation is very low, technically it is below RBA announced target, however medium term inflation targetting is not rigid and does not demand knee-jerk reaction from RBA.

He added that RBA's forecasts are not very different from Treasury's. Also he does't agree that RBA needs a different inflation target and that inflation targeting will work well into future, but nobody can control inflation in the short term. Inflation is a bit too low, but RBA sees exchange rate as a shock absorber. Furthermore, Stevens said that economic growth is continuing, stronger would be better, but it is not too bad.

Aussie is currently being traded few points above 0.7190 level. Pair is likely to find support around 0.7150 handle and resistance above 0.7250 level. Later today, in the US session, New Home Sales figures are scheduled for a release.

More in this category: « US Manufacturing PMI fell to 50.5 ZEW Economic Sentiment unexpectedly declined in May »

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