Reserve Bank deputy governor Guy Debelle says the outlook for the economy remains uncertain and has warned against removing stimulus measures too early.
Addressing a webinar conference on Tuesday, he said the central bank’s $100 billion bond buying program announced earlier this month had helped to lower the exchange rate as market interest rates declined, a positive for the economy.
“We’ve seen the exchange rate come down by a noticeable amount and enough to have an impact on the economy and have an impact on employment and people’s livelihoods,” he told the Australian Business Economists conference.
Reflecting on the global financial crisis 12 years ago, Dr Debelle warned against removing stimulus too early.
“A number of European countries learned this lesson to their cost after the global financial crisis,” he said.
Asked what more federal and state governments should be doing, Dr Debelle said the federal government only announced its budget in October, NSW in the past week and Victoria on Tuesday.
“We will just have to see how that takes effect but also how the economy evolves because there is still a large amount of uncertainty in both directions around the outlook for the economy,” Dr Debelle replied.
Politicians and economists are pretty confident the Australian economy has started the recovery from its massive economic contraction as a result of the coronavirus pandemic.
Retail spending and employment have both bounced back, while quarterly reports over the next week will show the extent of the recovery more broadly.
The economy sank into recession for the first time in almost 30 years in the first half of 2020, contracting by seven per cent in the June quarter after a more modest 0.3 per cent fall in the March quarter.
Australia has not suffered three consecutive quarters of contraction since the early 1980s recession, when it endured four.
The September quarter national accounts are due on December 2.
September quarter construction figures due on Wednesday will feed into that report.
Economists’ construction forecasts centre on a 1.9 per cent fall in the quarter as a result of the severe lockdown in Victoria and after a 0.7 per cent decline in the previous three months.