RBA’s Lowe: "Not unrealistic" to expect a further reduction in the cash rate, Aussie unfazed
The Reserve Bank of Australia (RBA) Governor Phillip Lowe is on the wires now, via Reuters, making a scheduled speech about the labor markets and spare capacity, at the Committee for the Economic Development of Australia luncheon, in Adelaide.
Possibility of lower interest rates remains on the table.
"Not unrealistic" to expect a further reduction in the cash rate.
"Unrealistic" to think one 1/4 point rate cut can alter growth path.
Lower rates to help through effect on A$, disposable incomes and financing costs.
Recent data suggest we are not making any inroads into economy’s spare capacity.
Important to recognize monetary policy is not the only option.
Options include fiscal and infrastructure spending, structural reform.
Economy can sustain faster jobs growth, lower unemployment rate than previously.
Considerable spare capacity in labor market, despite strong jobs growth.
Remains short of full employment, need jobless rate around 4.5%.
Underutilization rate around 8.1%, shows more spare capacity than unemployment alone.
Rise in participation is positive, but one reason for subdued wage growth.
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