SYDNEY, Feb 3 Reuters Australias top central banker pledged on Wednesday to keep interest rates near zero until there were enough jobs in the economy to push wages growth and inflation higher, a goal that has eluded the country for more than a decade.
Reserve Bank of Australia RBA Governor Philip Lowe reckons it will be another three years before policymakers achieve their objective, meaning policy will stay accommodative at least until 2024.
Weve got to get back to an unemployment rate of four point something to get the type of wage pressures that will deliver inflation outcomes consistently 2.5 on average. That still seems a long way away, Lowe said, responding to questions in Canberra following a speech titled The Year Ahead.
The jobless rate is hovering around 6.5 after jumping to 7.5 last year in the wake of the coronavirus pandemicdriven recession.
The RBA doesnt see the rate hitting 4 through its forecast horizon. Wage growth at 1.4 is less than half the pace of what Lowe had said was needed to ignite inflationary pressures.
We will not be adjusting interest rates until were confident that inflation is going to be back solidly between 2 and 3, Lowe added.
And because of the link to the labour market we see that being a long time away and thats why were confident in saying that its unlikely that interest rates go up for three years.
The RBA held its cash rate at a record low 0.1 on Tuesday, and surprised the market by extending its bond buying programme…