RBA governor expects long shadow cast by the pandemic as recovery gets underway
Even as the recovery gets under way, the RBA Governor Dr Philip Lowe expects there will still be a shadow cast by the pandemic.
"As a country, we will need to turn our minds as to how to move out of this shadow," Lowe said today.
"A reform agenda that makes Australia a great place for businesses to expand, invest, innovate and hire people would certainly help. For its part, the RBA will maintain its expansionary settings until progress is being made towards full employment and we are confident that inflation will be sustainably within the 2–3 per cent target band."
When answering questions he said the number of job losses has been lower than initially expected.
He described the pandemic as a "black swan event."
He re-affirmed negative interest rates were not on the policy agenda and were "extraordinarily unlikely" to happen in Australia.
"I don't think they work," he said.
Lowe said, we need to re-examine the way we tax consumption as well as property among a number of other things he mentioned.
In light of APRA's estimated residential mortgage rate buffer of 2.5% he said the odds of the cash rate increasing by such a significant amount wasn't likely
He also discussed his fears of a lack of dynamism in the economy, that we would go too far in the movement towards regulation and impact the future and growth of the economy.
If we want to have a better standard of living for us and our children then dynamism and growth in the economy are vital.
In his opening statement he said, "the evidence so far is that our mid-March package is working as expected and it is helping build the necessary bridge to the recovery."
"The shape and timing of that recovery depends not only on when restrictions are lifted, but also on the confidence that Australians have about their own health and their finances."
"With the national health outcomes better than earlier feared, it is possible that the economic downturn will not be severe as earlier thought. Much depends on how quickly confidence can be restored."