Reserve Bank of Australia Governor Glenn Stevens speech
Q&A to follow, but for now:
- Current inflation target regime has flexibility, still useful
- Need realism on what monetary policy can do, including pushing up inflation quickly
- Board aware of risks of trying to push inflation to target in "short order"
- Undershooting inflation target with reasonable economic growth might be "least bad" option
- Monetary policy cannot "simply dial up" the economic growth we need
- Says hard for monetary policy to revive demand when households so indebted
- Case for governments to borrow for investment assets that yield economic return
- Says not advocating governments borrow to fund recurring spending
- Path to budget balance turning out to be a very long one, many difficult choices to be made
- Australia's trend growth rate has slowed a little, demographic drag to last for decades
Headlines via Reuters
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Sounds like he is urging a slower path of rate cuts ahead ... calling for fiscal action (like most central bankers) ... also pointing out Australian growth rate will be slower ahead, and there are hard choices to be made
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Full text here
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The Australian Financial Review take on his speech is here (may be gated):
- Australians are "kidding themselves" over the need for a hard-nosed debate on budget repair that avoids lame appeals to narrow notions of fairness because the central bank's ability to rescue the economy is far less than it was during the last big crisis, Reserve Bank of Australia governor Glenn Stevens says.
