Lowe urged policymakers to pursue tax reform, invest in education and digital technologies, and implement better regulations to enhance the nation’s supply side and raise productivity, The Australian reported.
“The RBA’s forecasts have been prepared on the basis that growth in productivity picks up to be close to the rate in the years before the pandemic, which would contribute to a moderation in growth in unit labour costs and thus inflation,” he said. “If this pick-up in productivity does not occur, all else constant, high inflation is likely to persist, which would be problematic.”
Lowe warned that persistent high inflation can lead to reduced spending power for the entire community, particularly the poor, and increase income inequality.
“If high inflation does become ingrained in people’s expectations, history teaches us that the end result is even higher interest rates and even greater unemployment,” Lowe said. “It is for these reasons that the Reserve Bank Board remains resolute in its determination to return inflation to the 2–3% target range within a reasonable time frame and will do what is necessary to achieve that outcome.”
The RBA has maintained its official interest rates at the past two monthly board meetings.
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- Source: https://www.mpamag.com/au/news/general/lowe-warns-against-stricter-controls-on-landlords/456063
