In the remarks to a House committee, RBA Governor Philip Lowe said Australia has “now turned the corner” after an extremely difficult year, and economy recovery is “underway”. “The economic news has, on balance, been better than we were expecting. RBA is expected GDP growth to be “solidly positive” in both Q3 and Q4, followed by 5% growth over 2021 and 4% over 2022.
“Recent medical breakthroughs give us some hope that things will work out better than this,” Lowe added. “If so, confidence would lift and there would be a further easing of restrictions. The result would be an upside surprise to growth and jobs, especially given the significant policy stimulus that is already in place, the generally strong balance sheets and the substantial government incentives for businesses to employ people and invest.”
On monetary policy, Lowe said the movement in market prices in response to the package announced in November was “broadly as we expected”. The board will “continue to review the details of this package” and policymakers are “prepared to do more, if that is required”. But he reiterated that negative interest rate is “extraordinarily unlikely, with any benefits being outweighed by the costs”
