(Australian Associated Press)
Reserve Bank of Australia governor Philip Lowe says the board “will consider the case” for cash rate cut when it meets next month.
“A lower cash rate would support employment growth and bring forward the time when inflation is consistent with the target,” Dr Lowe said in a speech to the Economic Society of Australia in Brisbane on Tuesday.
“Given this assessment, at our meeting in two weeks’ time, we will consider the case for lower interest rates.”
The comment came hours after the release of minutes of the May board meeting showing that members discussed the likely implications of a lower cash rate, and was Dr Lowe’s clearest signal yet that the RBA could cut next month.
The RBA this month held the cash rate at its record low 1.5 per cent for a 33rd straight month, but board members explicitly acknowledged the likelihood of a cut if unemployment did not fall.
A week after the RBA board meeting, official data showed the unemployment rate rose in April to a worse-than-expected 5.2 per cent.
Dr Lowe said that if the unemployment rate does not fall, there were a number of options involving intervention by other authorities.
“These include further monetary easing; additional fiscal support, including through spending on infrastructure; and structural policies that support firms expanding, investing and employing people,” Dr Lowe said.
“Relying on just one type of policy has limitations, so each of these is worth thinking about.”