/ 03 February 2021

Lowe stays low

Mark your diary for the first Tuesday of the month for the next 3 years with the words ‘the Reserve Bank will leave interest rates on the record low of 0.1%‘. RBA Governor Philip Lowe says inflation (which is currently 0.9%) needs to rise to 2-3% for there to be an increase. “This will require significant gains in employment and a return to a tight labour market. The board does not expect these conditions to be met until 2024 at the earliest,” he said yesterday. More surprising was the announcement that the RBA will double its quantitative easing program to purchase an additional $100 billion of bonds. That’s a move central banks use to stimulate the economy when there’s nothing left to squeeze out of interest rates. The good news: Lowe says the economic recovery is “well underway”. He’ll unpack that further when he addresses the National Press Club today.

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