(Bloomberg) -- Australia’s central bank has a “completely open mind” about its April policy meeting and will be guided by key economic data on whether to raise interest rates further or pause tightening, Governor Philip Lowe said.

The Reserve Bank’s rate-setting board will closely monitor reports on employment, inflation, retail sales and business surveys ahead of its April 4 meeting, Lowe said in response to a question in Sydney on Wednesday.

“If collectively they suggest the right thing is to pause then we’ll do that, but if they suggest that we need to keep going we’ll do that,” the governor said at an Australian Financial Review conference. “So we’ve got a completely open mind about what happens at the next board meeting.”

The RBA chief’s message contrasts with Federal Reserve Chair Jerome Powell, who overnight opened the door to raising rates higher and potentially faster than previously anticipated. Lowe’s softer tone resulted in Australia’s 10-year yield touching 35 basis points below the similar-dated US rate, the deepest discount since Nov. 11.

The governor said the biggest difference with the US is that Australia’s wage growth is still consistent with the RBA’s 2-3% inflation target, reducing the risk of a price-wage spiral.

Lowe’s softer tone this week comes after a surprising hawkish shift last month and highlights his struggle to maintain a consistent message. That was underlined by a proprietary analysis of the RBA’s rate announcements by Pendal Group which showed the degree of hawkishness has swung from a score of 9 out of 10 in November to 4 out of 10 this month.

“I think that they have pivoted more dovishly, they are quite intent on not causing massive unemployment,” said Pendal Group Head of Income Strategies Amy Xie Patrick. 

“They are aware that they’re treading on a knife’s edge and I also think that the RBA is hoping that the other central banks of the world do quite a lot of the heavy lifting for them.”

When asked about his switch from hawkishness in February to more dovish in March, Lowe countered that his messaging is “very consistent,” while adding that nuances change from month-to-month depending on economic data. 

The RBA chief’s latest guidance will be a relief for Australia’s center-left government, which is trying to keep fiscal and monetary policy aligned to cool inflation. Treasurer Jim Chalmers says his May budget will focus on “relief, repair and restraint.” 

Even so, Lowe reiterated Wednesday that further rate increases are likely to be needed to rein in still-elevated inflation.

“Inflation is still too high,” the governor said in his earlier speech. “If we don’t get inflation down fairly soon, the end result will be even higher interest rates and more unemployment.”

The bank’s own forecasts, published last month, show headline inflation will only return to the top of its 2-3% target in mid-2025, from 7.8% last quarter.

The RBA is in the midst of its most aggressive tightening cycle in a generation, having hiked by 3.5 percentage points from a record low 0.1% in May. Money markets are pricing in a peak rate of 4% this year, suggesting at least one more quarter-point increase to come.  

Lowe said the current policy-setting environment is complex, “with many of the variables we monitor at near record highs or lows.” He reiterated a desire to engineer a soft landing in the economy and pointed out that the board is managing dual risks. 

“One is the risk of not doing enough, which would result in high inflation persisting,” he said. “The other is the risk that we move too fast, or too far.” 

--With assistance from Garfield Reynolds.

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