The Reserve Bank of Australia’s Deputy Governor Andrew Hauser has told attendees at Australia’s Economic Outlook forum of the key thing the central bank needs to achieve in order for interest rates to fall.
Speaking with Sky News’ Ross Greenwood, the RBA staffer tackled interest rates and heightened levels of inflation that have been a scourge on many Australians doing it tough.
In his interview, Mr Hauser discussed the interconnected relationship between inflation and interest rates.
“What we have to do is set interest rates to bring inflation down to the target,” Mr Hauser said before adding how the RBA will get the rates down.
“Our target is not for a particular level of interest rates, it’s a particular level of inflation,” he said.
The RBA Deputy Governor, who was preceded by business leaders from Amazon, Uber, Crown Resorts and Minerals Council Australia, said it was not the responsibility of ordinary Australians to tackle inflation.
“You don’t really want to be worrying about inflation. Inflation is the thing that (is) our job to take off the table,” Mr Hauser said.
“Having something called inflation that you can’t control and gets into every decision is incredibly toxic.”
Mr Hauser also made comparisons between Australia and Canada, which recently cut interest rates earlier this week by a quarter of a percentage point.
The European Central Bank followed suit with a 0.25 per cent interest rate cut, but Mr Hauser said Australia is not in the same position yet.
“In Canada, the case is … fairly straightforward,” he said.
“Their interest rates were higher than ours. Their inflation rate is lower than ours, and their unemployment rate has picked up quite a bit more substantially than ours.
“I think if you took those data out of Canada and you plugged them into the Australian context, you might well see a different policy stance.”
Speaking on Europe’s rate cut, the RBA Deputy Governor warned there was no guarantee interest rates would continue to drop.
“When I talk as I do to some of the people on the ECB (European Central Bank) board, they’re not all sure where rates are going next,” he said.
“So they’ve been keen, I think, to start the rate cutting cycle to show that they’re independent of the US.
“But whether that goes a lot further and where it goes from here I’m not so sure.”
Mr Hauser’s interview with Mr Greenwood was preceded by a keynote address and Q+A from Prime Minister Anthony Albanese who tackled the government’s staunch renewables approach to net-zero, the impacts of a war with China and why he should be re-elected at the next election.