RBA's Lowe says they are on pause as labour market solid - UOB

Analysts at UOB noted that the Reserve Bank of Australia (RBA) Governor Philip Lowe delivered a speech in Sydney ahead of his testimony to the parliament committee later this week.

Key Quotes:

"In his speech, Lowe signalled the solid performance of Australia’s labour market is allowing RBA to extend an interest-rate pause."

"Lowe noted that households are coping reasonably well with high debt, but is affecting spending and he warned that rising debt from a record-low cash rate of 1.5% could stretch household finances too far, that if “households having decided that they had borrowed too much, might cut back consumption sharply, hurting the overall economy and employment…It is difficult to quantify this risk, but it is one that is difficult to ignore.”"

"Lowe did not see much risk of inflation expectations becoming unanchored and would like the economy to grow more quickly. He noted that the downturn in mining investment 90% done while non-mining investment is still subdued. Another of Lowe’s concerns was that wage growth is too low, and he hopes it will pick up.

He also highlighted there is scope to do more on Australian infrastructure, especially on transport and that the government should not be afraid to borrow to build infrastructure."