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Reserve Bank of Australia warns against 'chronic pessimism' in Australian culture




RBA deputy governor Phillip Dr Lowe says that opportunities 'will go begging' if we are too pessimistic.

RBA deputy governor Phillip Dr Lowe says that opportunities ‘will go begging’ if we are too pessimistic. Photo: Sasha Woolley

The Reserve Bank has warned that Australians must not let their current uncertainty about the future mutate into “chronic pessimism” if they want to stop their living standards deteriorating.

It has warned if pessimism became ingrained in Australia’s culture then “many of the opportunities that we do have are likely to go begging.”

RBA deputy governor Phillip Lowe says the economy's "fundamentals" are still strong, and can form the basis for optimism.

RBA deputy governor Phillip Lowe says the economy’s “fundamentals” are still strong, and can form the basis for optimism.

Deputy governor Philip Lowe has told a CFA Institute Australia Investment Conference in Sydney on Tuesday that Australia is in the middle of a critical period, with the terms of trade falling and an increasing number of people leaving paid employment as they retire.

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But we need to realise the economy’s “fundamentals” are still strong, and can form the basis for optimism, he said.

He then delivered a message that was as much political as it was economic, saying Australia’s flexible economy is a great thing, but policymakers cannot keep relying on ‘monetary policy’ to raise living standards, and they must keep in mind workers’ unequal bargaining positions.

“Ultimately, the rate at which our living standards improve is unlikely to be driven by the actions of the central bank,” Dr Lowe said.

“[And] as the Productivity Commission’s recent draft report on Australia’s framework for workplace relations concludes, it should be possible to simplify and improve the responsiveness of our current system while, at the same time, addressing the sometimes unequal bargaining positions in the labour market.”

more to come..

 






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