The Reserve Bank governor Philip Lowe says he’s confident the Australian economy will bounce back strongly from the extended eastern states lockdowns and insists interest rates will remain low for years to come.
Despite the positive outlook from Mr Lowe, he did concede businesses face tough times because of these current ongoing lockdowns.
“Many are in ‘wait, survive and see’ mode, having experienced a large drop in revenue,” he said in a speech in Sydney this week.
“Government assistance is helping, but the longer they have to wait before reopening, the more difficult things will become and the greater the potential damage to this important part of the economy.
“For some businesses, there is a limit to how long they can wait. So the sooner we can open safely the better.”
Mr Lowe says the delta outbreak of coronavirus has delayed, not derailed, the economic recovery, saying prior to it there was strong demand for jobs, low unemployment and things were tracking well.
While vaccination rates were the key to economic recovery, it was further delta outbreaks, or new strains altogether, that posed the biggest risk to the economy.
But the RBA has again ruled out lifting interest rates to cool the housing market, which has hit record highs.
“I want to be clear that this is not on our agenda,” Mr Lowe said.
“While it is true that higher interest rates would, all else equal, see lower housing prices, they would also mean fewer jobs and lower wages growth.
“This is a poor trade-off in the current circumstances.”