Australian economists explore QE options - Bloomberg
|- The central bank may need to look elsewhere for ammunition.
- Lower AUD and tax cuts to provide the boost the economy needs.
An article by Bloomberg news said the prospect of interest rates going below 1% has prompted Australia’s economists to start exploring what much of the developed world has already contended with: the introduction of unconventional monetary policy.
While the Reserve Bank is unlikely to embark on quantitative easing for now simply to accelerate inflation and support hiring, a consensus is forming about when it would. Should a serious shock occur -- most likely from offshore and probably China -- that drives up the jobless rate and threatens recession, the central bank will then need to look elsewhere for ammunition.
FX implications
" A lower AUD and tax cuts will provide the boost the economy needs to get back onto a growth path that will push the unemployment rate lower over 2020," analysts at ANZ Bank argued.
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