Australia's top central banker on Friday said interest rates are closer to normalisation after a successive run of outsized hikes, although he warned rates are still low, hinting a range of 2.5%-3.5% would be appropriate depending on economic cycles.
Appearing before a parliamentary economics committee, Reserve Bank of Australia Governor Philip Lowe flagged more interest rate rises are required to bring inflation back to the bank's 2%-3% target range, but said it would be appropriate to slow the rate of increase at some point.
"We are closer to that now. We are at 2.35%, so we're getting closer to the range that you think is normal but we're probably still on the low side," Lowe added. Markets are wagering on further hikes to a peak around 3.85%, though investors are less sure whether the central bank will go by another outsized 50 basis points in October or cut back to quarter-point moves.
Lowe said the next board meeting will be considering whether its a 25 bp increase or a 50 bp increase, reiterating the size and timing of future rate hikes will be guided by the incoming data and the board's assessment of the outlook for inflation and the labour market.
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