* RBA sees GDP down at least 2% in Q3, rebounding in Q4
* Rapid vaccinations to soon allow restrictions to ease
* Longer term, will take time to get wages and inflation up
* Lowe disagrees with market pricing for hikes in 2022, 2023
SYDNEY, Sept 14 (Reuters) - Australia's top central banker
said on Tuesday coronavirus lockdowns would cause a sharp
contraction in the economy this quarter but was confident
activity would rebound quickly once restrictions were eased in
Despite that near-term optimism, Reserve Bank of Australia
(RBA) Governor Philip Lowe also reiterated that interest rates
were not expected to rise from record lows until 2024 given
persistently sluggish wage growth.
Indeed, Lowe took issue with market pricing for rate hikes
in late 2022 and 2023.
"These expectations are difficult to reconcile with the
picture I just outlined and I find it difficult to understand
why rate rises are being priced in next year or early 2023,"
Lowe said after noting the huge inertia in wages in Australia.
"While policy rates might be increased in other countries
over this timeframe, our wage and inflation experience is quite
Wage growth in Australia is running at a miserly 1.7% while
Lowe argued it would need to top 3% at least to get underlying
inflation up into the target band of 2-3%, something not
achieved since 2015.
For the near-term, Lowe acknowledged that the lockdowns
across Sydney, Melbourne and Canberra would likely see the
economy contract by at least 2% in the September quarter, and
possibly by significantly more.
Unemployment was also expected to reach the "high fives" for
a short period, he said. The jobless rate stood at 4.6% in July.
"This is a major setback, but it is likely to be only
temporary," said Lowe. "We expect the economy to be growing
again in the December quarter, with the recovery continuing into
Much of this optimism was due to a rapid pick up in
vaccinations which the government believes should allow
restrictions to be eased from mid-October onwards.
The upbeat outlook was supported by surveys of businesses
and consumers out on Tuesday which showed a marked improvement.
National Australia Bank's closely watched measure
of business conditions rose 4 points to +14 in August, well
above its long-run average as sales and profits jumped.
"While we expect a large hit to activity in Q3, the survey
supports our view that once restrictions are eased, activity
will rebound," said NAB chief economist Alan Oster.
A survey of consumers from ANZ showed New South Wales' plan
to start opening up in October had an immediate impact, with
confidence surging 10.6% in the state.
Lowe said consumer spending power was supported by fiscal
stimulus, a high saving rate and the rapid rise of house prices.
Figures from the Australian Bureau of Statistics out on
Tuesday showed home values jumped a record 6.7% in the June
quarter to be up a red-hot 16.8% on the year.
That lifted the notional value of the country's real estate
by a record A$596.4 billion ($438.35 billion) to A$8.9 trillion.
While surging prices have stoked concerns about a lack of
affordability, Lowe dismissed calls to fix the problem by
raising interest rates.
"Society-wide concerns about the level of housing prices are
not best addressed through increasing interest rates and curbs
on lending," said Lowe.
($1 = 1.3605 Australian dollars)
(Reporting by Wayne Cole; Editing by Ana Nicolaci da Costa and