The RBA governor sat down with AFR economics editor John Kehoe at the Australian Financial Review Business Summit to talk about everything from interest rates to digital payment systems.
Reserve Bank of Australia governor Philip Lowe sat down with the Australian Financial Review’s economics editor John Kehoe at
If, collectively, they suggest that the right thing is to pause, then we’ll do that. But if they suggest that we need to keep going, then we will do that. So, we’ve got a completely open mind about what happens at the next board meeting.Yesterday we did discuss the lessons from the overseas experience because a few months ago, people were saying the Western economy or the advanced economies was slowing down, inflation was coming down, the battle was won.
Our judgment, at least at the moment, is that the benefits we would get from getting inflation back to 3 per cent six months earlier, at the cost of a lot of job losses isn’t worth it. But I agree with you that we want to see inflation back to 3 per cent by 2025. Extending beyond that I think he’s getting too long. To get it back more quickly, we give up jobs, and I don’t think it’s worth it.
But at the same time, we know that if we don’t get on top of inflation [there will be] higher interest rates, more unemployment, more pain. We think we can navigate this narrow path and bring inflation down and keep many of the gains in the labor market. But if you don’t get inflation down, we will be in all sorts of trouble.
But there are important differences between the US and Australia and the wage outcomes – that’s a really, really important difference. In India, the weekend before last, talking to chair Powell and a number of other central bank governors, and our labor market outcomes are quite different.
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