- The RBA Governor was modestly upbeat on Australia’s growth prospects in a Monday speech
- But he worried that low wage growth could become entrenched
- The Australian Dollar drifted down after his remarks, but based soon after
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The Australian Dollar drifted lower against a generally stronger US counterpart Monday despite a quite upbeat speech from its central bank governor which stuck to old themes.
Speaking at a leadership conference in Sydney Philip Lowe reportedly said that the Australian economy should pick up speed after a patchy start to the year. First-quarter growth was recently revealed to have been an annualized 1.7%. That was well down on the 2.4% rise seen in the last three months of 2016.
“It’s likely that growth over the next couple of years will be a bit stronger than it has been recently,” Lowe said according to wire reports. He also cited strong local sentiment surveys and labor market health as reasons to be cheerful.
However, Lowe also warned of headwinds- albeit ones he has fretted about before. Slow wage growth, rising home prices and high household debt were possible hurdles ahead, he reportedly said, with the former likely to be an entrenched problem.
“As things currently stand is looks likely that the average growth in per capita incomes over the next quarter of a century will be lower than over the past quarter,” Lowe said.
The RBA chief also worried about Australia’s often deadlocked politics and wondered whether good enough good reform ideas could get through it to the statute books.
There wasn’t any real news here for the Australian Dollar, and certainly nothing to dent the market thesis that record-low Australian interest rates are going nowhere this year and, probably well into next. AUD/USD slid gradually before and after the speech.
— Written by David Cottle, DailyFX Research
Contact and follow David on Twitter:@DavidCottleFX