The Reserve Bank governor devoted much of his post-meeting statement yesterday to giving bond and foreign exchange markets a solid boot up the backside, making sure they understood there would be no rate rises next year, and there was no basis for any more surges in bond yields or the value of the Aussie dollar.
But deep in the statement was a significant change in the bank’s view on how long it will take to find wage growth sufficient to drag inflation higher and get monetary policy back to something resembling normality.
After the ruction in bond markets last week fuelled -- notionally -- by inflation fears, and the RBA's pushback on Friday and Monday with additional purchases of three- and 10-year bonds, the post-meeting March statement was an opportunity for Philip Lowe to once again explain to screen jockeys in Australia and offshore how the bank saw both the inflation "threat" and the bank's monetary policy goals.
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