SYDNEY Reuters Australias top central banker on Thursday sought to drive home the message that a stepdown in bond purchases did not represent a withdrawal of support, rejecting views it had embarked on a policy tightening path.

The Reserve Bank of Australia RBA on Tuesday announced it would scale back its government bond purchases from September to A4 billion a week from current A5 billion, sparking talks of rate rises as early as next year.

In a speech in Sydney on Thursday, Governor Philip Lowe pushed back on market pricing, saying interest rates will remain at current record lows of 0.1 for a long time to come.

He also clarified it was the total stock of bonds purchased, not the flow, that mattered for policy.

Its a modest scaling back and its reflecting the progress that weve made, Lowe said, referring to recent strength in economic data, particularly solid employment growth.

The RBA, last year, slashed interest rates three times to 0.1 and launched a massive bond buying programme to drive borrowing costs down.

The measures have helped boost jobs growth, consumer spending and housing prices, propelling Australias A2 trillion 1.5 trillion economy out of its first recession in three decades.

Yet more progress was needed, Lowe said.

Unemployment would need to fall further and hold in the low 4 levels from 5.1 now to lift inflation to within the RBAs 23 target band, an outcome not expected until 2024.

It is not enough for inflation to be forecast in this…