“Now is not the time for higher interest rates“said the Governor of the Reserve Bank of Australia (RBA), Phillip Lowe, while delivering a speech titled” Covid, our changing economy and our monetary policy “in a webinar organized by the Economic Development Committee of Australia.
Additional comments:
Falling world interest rates had a ‘gravitational pull’ on Australian rates.
Resisting that ‘pull’ would have put upward pressure on the Australian dollar.
It could have a quick rebound if we get more good news on the health front
The pandemic is likely to leave a prolonged period of higher unemployment.
It is likely that the challenge ahead is more job creation than controlling inflationary pressures.
Australians have reacted sensibly and worked together to contain the virus.
Recent local data is better than expected, easing of restrictions lifted spirits.
Now we go for the path of economic recovery.
QE affects capital flows, the exchange rate, and asset prices.
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