SYDNEY, Mar 10 (XINHUA/APP): Australia’s economy has performed better than expected in terms of pandemic recovery thanks to virus suppression and targeted stimulus measures, according to Reserve Bank of Australia (RBA) Governor Philip Lowe.
In an address to the Australian Financial Review business summit on Wednesday, Lowe also reiterated the official interest rate would likely remain at 0.1 percent despite concerns over increasing house prices.
Australia’s gross domestic product (GDP) increased by 3.1 percent in the December quarter, following a 3.4 percent lift in the previous three months. “As a result, we are now within striking distance of recovering the pre-pandemic level of output,” Lowe said.
Lowe said the figures were far better than was forecast in August last year, reflecting the country’s success in containing the virus as well as the efficacy of fiscal and monetary policy support. One of the monetary policy measures was to drop the official interest rate to the record low of 0.1 percent at a meeting in November last year — which Lowe acknowledged had been partially responsible for increasing prices in the country’s property market.
Despite some speculation that concerns over affordable housing would put pressure on the RBA to shift the interest rate, Lowe said changing the current rate before 2024 would be unlikely. “I would like to reiterate that the RBA does not target housing prices, nor would it make sense to do so,” Lowe said.
“There are various tools, other than higher interest rates, to address these concerns, leaving monetary policy to maintain its strong focus on the recovery in the economy, jobs and wages.” While many professions have been hard hit by the pandemic, Lowe said that the recovery in employment in Australia had been “V-shaped”, with the unemployment rate dipping to 6.4 percent in January.
However, he warned that the downward trend in unemployment could be disrupted when the government’s employment stimulus scheme, Job-Keeper comes to an end in late March. “There are still many people who want a job and can’t find one and many others want to work more hours,” Lowe said.
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