- Australia & New Zealand Banking Group Ltd.
The Reserve Bank of Australia's outgoing Governor Glenn Stevens defended the central bank's inflation target amid calls from some economists to сut the interest rate amid persistently low inflation around the globe. The Governor said that impossible to control inflation in the "very short-term and you shouldn't try." Australia's annual inflation rate has remained below 2% since the third quarter of 2014. Australia's weak inflation outlook underscores the challenge facing Stevens's successor, his current deputy Philip Lowe. Stevens is due to step down on September 17. The Governor added that inflation was currently a "bit too low" but voiced confidence it would return to the 2%-3% range in the medium-term. Beyond weaker-than-expected inflation numbers Stevens said the economy was performing reasonably, but admitted growth was not progressing at the desired rate. The head of the central bank also highlighted a cooling of the housing market, although the RBA remained vigilant given the risks of low interest rates.
The RBA made its first move on the OCR in a year at its most recent board meeting on May 3, sending the cash rate to a record low of 1.75% despite prior concerns over the potential to further stimulate the housing market. Analysts expect at least one more rate cut this year, with that move potentially coming during Stevens' term as futures pricing points to a near 50-50 chance of an August cut.
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