Head of the Reserve Bank of Australia

Philip Lowe, President of the Reserve Bank of Australia (RBA), does not believe that a global coordinated financial response to the conflict in Ukraine is needed.

Mr Rowe said central banks were working closely during the global financial crisis, but the current situation was quite different.

“”[They worked together in the GFC] Financial markets were frozen and central banks needed to unfreeze those financial markets. “He said. Said The first banking conference hosted by the Australian Bankers Association on March 11 in response to questions from the organizers.

“At this point, I don’t think there is a need for coordinated policy compliance. All we have to do is sit down and share information.”

He said many sanctions on Russia have caused “great turmoil” in the economy, but their effects have not yet affected the global financial system.

“But it’s still in its infancy. There are a lot of these sanctions coming to go through the financial sector, and we’ll see it again tonight,” Rowe said.

In his speech, Rowe also talked about the “psychology” of inflation. There, ongoing supply shocks can put pressure on employers to raise wages.

“They didn’t want to raise their wages,” he said. “The period of headline inflation in traffic can help change psychology, and companies will decide that they have to raise prices. And if prices are rising, they will pay higher wages. I can afford to pay. “

However, he said the current increase in wage growth is still low and will be “a considerable amount of time” before it recovers significantly.

Rowe has flagged “plausible” official rate hikes since Australia’s inflation reached 3.5%. This is what he reiterates, especially following the intensification of the conflict in Ukraine.

“Russia’s invasion of Ukraine in recent weeks has pushed up commodity prices altogether, which is the high prices for energy, all base metals, and many agricultural products,” he said.

In particular, household costs are being pumped down, pushing up living costs as people return to work or school. In some parts of the country, it’s well above $ 2 per liter ($ 7.57 per gallon).

David Plank, head of ANZ’s Australian economic sector, said Lowe’s speech suggested a rate hike in the third quarter or June instead of the second quarter.pdf).

“A significant rise in inflation will challenge this, as it will be difficult for the RBA to claim that it can be patient in ways that are not possible in countries with significantly higher inflation.” Said Planck.

Rebecca Chu


Rebecca Zhu is based in Sydney. She focuses on Australia’s economy, property and education. Do you have a hint? Contact her at [email protected]