Australian shares extend gains as RBA urges patience on policy tightening

Australian shares closed higher on Wednesday, led by energy and mining stocks, as the central bank offered an upbeat economic outlook and called for patience in tightening monetary policy.

The resources-heavy S&P/ASX 200 closed 1.2% higher at 7,087.7. The benchmark, which fell into correction territory last week, rose for the second straight session after three straight weeks of losses.
 

The Reserve Bank of Australia said it had "a rare opportunity" to reach full employment with the unemployment rate expected to fall under 4% for the first time in half a century and that justified its accommodative stance.
 

It, however, opened the door to a rate hike later this year, depending on how inflation, wages and consumption fared in the year ahead.
 

"Highlighting unpredictability, the Reserve Bank of Australia expects wages to grow more aggressively in the year ahead with economic growth expected to be on the softer side," said Steven Daghlian, a market analyst at CommSec.
 

With inflation expected to be stronger, it is a plausible scenario that rates could go up later this year, Daghlian said.

Energy stocks <.AXEJ​> closed 2.8% higher, hitting their highest since Jan. 21, supported by a jump in oil prices.
 

Heavyweights Woodside Petroleum and Santos added 3.3% and 2.9%, respectively.
 

Mining stocks were a bright spot as they advanced 2.1%, hitting their highest since Jan. 27, as copper and nickel prices gained on a weaker dollar.
 

Sector leaders Rio Tinto, BHP and Fortescue Metals gained between 1.6% and 3.9%.

In New Zealand, the benchmark S&P/NZX 50 closed 1.5% higher at 12,238.4, marking its third straight session of gains, after data showed the country's jobless rate fell to a record low of 3.2% in the fourth quarter.