In this uncertain time the Reserve Bank of Australia tries to maintain stability. The world is in a deep hole: economic output is down, much more than in the 2008 crisis, and unemployment has risen sharply. Australia has suffered with the rest of the world.
In a speech to the Economic Society of Australia yesterday, Reserve Bank deputy governor Guy Debelle did not sugarcoat the problems. Economic recovery will be a long time coming.
While the RBA tries to keep borrowing costs low and credit available (monetary policy), Australia’s recovery will depend more on fiscal policy: government spending and taxes.