Todd Bishop
The Reserve Bank of Australia cut interest rates for two consecutive months in June and July, and the market is concerned about whether there will be another round of action. Philip Lowe, president of the central bank, said that long-term low-interest policies will be implemented if necessary to achieve inflation targets.
The inflation target will not “move the dragon”
“ABC” reported that Philip Lowe gave a speech at a luncheon, pointing out that lowering inflation targets can achieve short-term effects, but such “shifting the goalposts” is not a good way to build long-term trust, and will also consolidate a low-inflation mentality.
If you change a long-term goal, it may also hurt the economy. He pointed out that if inflation is extremely uncertain in the future, it will damage investment and employment. On the contrary, if there is a certain degree of prediction, the economic effect will be the best.
Australia’s current housing construction is seriously sluggish and the unemployment rate is on the rise. Philip Lowe made it clear that it may further cut interest rates: “If demand growth is insufficient, the central bank is prepared to support the economy by further relaxing monetary policy.”
In addition, he also pointed out that other public policies will “play a role” in this situation. And even if the interest rate is not cut, the public does not have to worry about raising interest rates.
