RBA's Lowe: Australia has better chance of delivering ‘‘soft landing’’ than other countries

Governor of the Reserve Bank of Australia Philip Lowe noted that Australia had a better chance of achieving a ‘‘soft landing’’ than almost any other developed country. Australia benefits from the fact that Australian wage growth is running at a weaker pace than peers.

Speaking at a parliamentary panel in Canberra on Monday, he highlighted that a ‘‘soft landing’’ was a more likely scenario for Australia. He believes that the best outcome for the country would be a slight increase in wages.

Australia is considered the first developed country to stick with a slower pace of rate hikes. It lifted its interest rate by 25 basis points in the last two meetings. The Australian central bank is also expected to push the interest rate to 3.1%, up from 2.85%, next week. 

Australian policymakers are being more flexible while making decisions in the current cycle. It turned out that they could opt for a 50 basis points hike, if necessary, or keep the rate at the same level for a long period of time to gauge the economic impact of the rate hikes.

The RBA's prediction is that inflation will peak at 8% this year. It is expected to ease to 3.25% by the end of 2024.