Australia central bank chief has ‘open mind’ about future tightening

Australia’s top central banker said on Wednesday he is confident higher interest rates are working to cool inflation but it is possible they will have to rise further, suggesting a decision on whether to resume hiking in August may be a close one.

Reserve Bank of Australia Governor Philip Lowe also announced changes to how the central bank formulates and announces interest rate decisions, including fewer but longer meetings, after a review recommended sweeping changes to the decades-old institution.

The RBA held rates steady last week, having raised interest rates by a whopping 400 basis points since May of last year to an 11-year high of 4.1%, saying it wanted time to assess the impact from past hikes.

“The Board is very conscious that monetary policy operates with a lag and that the full effects of the tightening to date have not yet been felt,” Lowe said in a speech to economists in Brisbane.

“We’re confident that what we’re doing is working. The question mark is how much more do we need to do? And we have got a completely open mind on that question.”

Lowe noted that the board would have an updated set of economic forecasts next month as well as a revised assessment of the balance of risks, which would help to inform the August decision.

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