RBA Governor Philip Lowe.

RESERVE Bank Governor Philip Lowe has given the clearest sign yet that Australia will not automatically follow the United States and Canada in raising interest rates.

He told the Anika Foundation Luncheon in Sydney today that Australia was “better placed” than others to allow for financial stability considerations to be taken into account when setting monetary policy.

Mr Lowe said a low inflation, low unemployment, low interest rate environment did pose medium-term risk given conditions were attractive to investor borrowing.

But, he said, Australia’s monetary policy framework was better placed to deal with that than some others.

“Elsewhere in the world, some central banks are now starting to increase interest rates and others are considering when to withdraw some of the monetary stimulus that has been put in place,” he said.

“This has no automatic implications for monetary policy in Australia. These central banks lowered their interest rates to zero and also expanded their balance sheets greatly. We did not go down this route. Just as we did not move in lock-step with other central banks when the monetary stimulus was being delivered, we don’t need to move in lock-step as some of this stimulus is removed.”

He said RBA’s decisions would “continue to be made within the framework of our medium-term inflation target” of between 2 and 3 per cent.

“We are seeking to do this in a way that supports sustainable growth in the economy and that best serves the public interest.”