The Reserve Bank of Australia isn’t likely to follow its U.S. counterpart’s interest-rate trajectory, said Australian Treasurer Scott Morrison.
Speaking on the sidelines of the G-20 meeting in Buenos Aires, Morrison was responding to a question about the impact of higher U.S. interest rates on the Australian economy. The Federal Reserve is this week expected to make the latest in a series of rate hikes.
“We’re on different tracks here,” Morrison said in a Bloomberg Television interview in Buenos Aires. “Australia’s monetary settings have been far more, I think, stable in terms of what the outlook is. It’s been that way now for some period of time and the factors that are keeping them in that frame, there’s no real view that that’s about to change anytime soon.”
Australia’s central bank has kept interest rates at a record low 1.5 percent since September 2016, with markets seeing a less than 50 percent chance of a hike this year. Governor Philip Lowe has reiterated a gradual path to normalization: he wants to see inflation nearer the midpoint of its 2 percent to 3 percent target and a lower jobless rate before lifting rates for the first time since 2010.
The RBA’s period of stability likely “flows through to the volatility you might see in exchange rates being more modest in Australia, which is also a positive for us,” Morrison said.