SYDNEY, Feb 11 (Reuters) - Australia's central bank chief said on Friday that monetary policy was likely to remain on hold for some time, but also sounded upbeat on the health of the economy, suggesting the next move in interest rates is likely to be up.
The Australian dollar dipped to a low of $1.0005 after his comments, while interbank bill futures <0#YIB:> showed little reaction with markets still betting the central bank won't lift rates until late in the year.
Reserve Bank of Australia Governor Glenn Stevens told a parliamentary committee that it was reasonable to assume that rates will remain on hold for some time.
He also said the effects of serious floods and Cyclone Yasi, which caused widespread damage and dealt a major blow to some crops, would not permanently scar the economy.
"We do not think the effects on activity of these events will derail the expansion. Nor should the price effects pose a serious threat to the achievement of the medium-term goal for inflation, provided the community can understand their temporary nature and expectations of ongoing inflation remain well-anchored," Stevens said.
Stevens said Australia's terms of trade were higher than assumed three months ago and will probably peak higher and later than the central bank had previously assumed.
The Reserve Bank of Australia kept interest rates unchanged at 4.75 percent this month. Last week the central bank said it would look past the impact of recent floods when setting interest rates and stay focused on the medium term outlook for strong economic growth. (Reporting by Ian Chua; Editing by Ed Davies)