SYDNEY (Reuters) – Australia’s top central banker struck an optimistic note about the country’s economy on Wednesday, but warned a recovery from the coronavirus pandemic would be bumpy and uneven, signalling the need for policy support for a long time to come.
Economic growth is expected to be “solidly positive” in both the September and December quarters, Reserve Bank of Australia (RBA) Governor Philip Lowe said at an appearance before a parliamentary economics committee.
“There is still a high degree of uncertainty about the outlook,” Lowe said.
“What has become clearer, though, as time has passed is that Australia is likely to experience a run of years with unemployment too high and wage increases and inflation too low, leaving us short of our goals,” Lowe added.
“In the current environment, addressing the high rate of unemployment is a priority for the Reserve Bank Board. We are intent on doing what we can, with the tools that we have, to help here,” he said, while reiterating that a policy of negative interest rates was extraordinarily unlikely.
On Tuesday, the bank left its cash rate at a record low 0.1% and maintained its A$100 billion quantitative easing programme.
Data due later on Wednesday is expected to show the A$2 trillion ($1.5 trillion) economy expanded 2.6% in the third quarter after a 7% slump in the three months ended June.
(Reporting by Swati Pandey; Editing by Sandra Maler and Lincoln Feast)