Reserve Bank of Australia Governor Philip Lowe (2nd L) speaks at a parliamentary committee hearing as he sits next to Deputy Governor Guy Debelle (L) in Sydney, Australia February 22, this year. -Reuters
Australia's top central banker gave a positive assessment of the country's economy on Thursday, saying two policy rate cuts, tax rebates by the government and higher levels of infrastructure investment were supporting activity.
Reserve Bank of Australia (RBA) Governor Philip Lowe met with Treasurer Josh Frydenberg in Melbourne earlier in the day and made some remarks to the local media.
"The outlook is being supported by our lower interest rates, by your tax cuts, by higher levels of investment in infrastructure, by a pick-up in the resources sector and the stabilization of the housing market in Sydney and Melbourne," Lowe said.
Australian home prices showed early signs of bottoming out in June with values in the two biggest cities inching up for the first time since 2017 as sentiment was boosted by mortgage rate cuts by banks.
A long property market downturn, sluggish consumer spending, lukewarm inflation and rising unemployment forced the RBA to slash interest rates twice since June to a record low of 1%. Financial futures see a real chance of a third move before Christmas that would take the cash rate to an unprecedented 0.75%.
Governor Lowe has also taken the unusual step of openly calling for more action on fiscal stimulus and infrastructure spending to support growth, which is at its weakest since the 2008 global financial crisis.
Lowe did not speak specifically about government spending on Thursday but Treasurer Frydenberg said the ruling Liberal-National coalition and the RBA will work together to keep the economy going. "I also agree with you that a priority is to make sure that Australia remains a great place for businesses to expand, innovate, invest and employ people and I'm sure we can do that," Lowe said, addressing Frydenberg.
A record run of trade surpluses helped by stellar prices for Australia's top export earner, iron ore, has showered the government with more cash to revive the country's slowing economy.However, the conservative coalition government is seen likely to stick with its election promise of returning the budget to black.
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