CANBERRA, AAP – Reserve Bank of Australia governor Philip Lowe will get the opportunity to expand on his thoughts on the economic outlook when he addresses a conference.
However, given the audience – the Payments Summit 2021 – Dr Lowe may only briefly touch on monetary policy and the economy during his speech on Thursday.
Following this week’s monthly board meeting, Dr Lowe was fairly positive on the outlook as the economy recovers from the setback of the recent COVID-19 lockdowns related to Delta variant in the nation’s largest states.
He expects growth to return to its pre-Delta path in the first half of 2022 after suffering the third largest economic contraction on record during the September quarter.
He also said the emergence of the Omicron coronavirus strain, while a source of uncertainty, is not expected to derail the economy.
However, the central bank board will remain patient in lifting the cash rate, reiterating it wants to see inflation sustainably within the two to three per cent target band.
“This is likely to take some time,” Dr Lowe said in his post-meeting statement.
However, the Organisation for Economic Cooperation and Development warned last week the RBA needs to be vigilant about signs of rising inflation and that it may need to tighten monetary policy faster than it is currently anticipating.
One factor that is expected to drive up inflation and wages growth will be a falling unemployment rate.
Data this week showed the strength of job advertising will see the unemployment rate quickly return to below five per cent after the unexpected spike to 5.2 per cent in October.
The RBA wants to see the jobless rate at four per cent or lower.
The Australian Bureau of Statistics will release its latest payroll jobs report for the fortnight ending November 13 on Thursday, a dataset that has shown a sharp recovery over October.
The ABS released figures on Wednesday that showed 378,000 employment positions were lost during the September quarter and at the height of the lockdowns in NSW, Victoria and the ACT.
Hours worked over the September quarter also posted was the second-largest fall in the series, which goes back to the mid-1990s.