Reserve Bank Governor Philip Lowe will deliver his final speech before the review decision is made on July 18. The speech, which will be given at the Reserve Bank Review and Monetary Policy Economic Society of Australia (QLD) Business Lunch in Brisbane, is expected to provide further insights into the Bank's thinking on monetary policy.
Lowe has been under increasing pressure to raise interest rates in recent months, as inflation has surged to its highest level in 30 years. However, the Bank has so far resisted calls for a rate hike, arguing that the economy is still recovering from the pandemic and that higher rates could slow growth.
In his speech, Lowe is likely to reiterate the Bank's commitment to bringing inflation back to its target range of 2-3%. However, he may also signal that the Bank is preparing to raise rates in the coming months.
The review decision on July 18 will be closely watched by markets and economists. A decision to raise rates would be a sign that the Bank is serious about tackling inflation, but it could also weigh on economic growth.
What to watch for in Lowe's speech
In his speech, Lowe is likely to address the following issues:
- The current state of the economy
- The outlook for inflation
- The Bank's monetary policy stance
- The timing of any future rate hikes
Lowe is also likely to comment on the Bank's review process and the factors that will be considered in the decision.
What does the speech mean for markets?
Lowe's speech is likely to have a significant impact on markets. If he signals that the Bank is preparing to raise rates, bond yields and the Australian dollar are likely to rise. However, if he expresses caution about raising rates, markets could sell off.
The importance of the review decision
The review decision on July 18 is a critical juncture for the Reserve Bank. A decision to raise rates would be a sign that the Bank is serious about tackling inflation, but it could also weigh on economic growth. A decision to keep rates on hold would be a sign that the Bank is still cautious about the economic outlook.
The decision will be closely watched by markets and economists, and it will have a significant impact on the Australian economy.
