Reserve Bank of Australia Governor Glenn Stevens said the economy’s growth will remain lower for longer and policy easing may be less effective than in the past.
“The economy needs a bit more growth than we currently have,” Stevens told a parliamentary panel in Sydney today. “The board is also very conscious of the possibility that monetary policy’s power to summon up additional growth in demand could, at these levels of interest rates, be less than it was in the past.”
The central bank ended a 17-month pause and cut interest rates this month to a fresh record-low of 2.25 percent as it tried to boost confidence and encourage hiring in an economy where unemployment has risen to a 12 1/2-year high. The economy is on track to record an expansion below its potential for six of the past seven years, the longest stretch since the last recession in 1991.