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.