Philip Lowe: The economic outlook and monetary policy

Address by Mr Philip Lowe, Governor of the Reserve Bank of Australia, to the Economic Society of Australia, Brisbane, 21 May 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Thank you for the invitation to speak to the Economic Society of Australia. It is very good to be back here in Brisbane today.

I would like to begin by providing an update on recent developments in the global and Australian economies. I will then discuss how our thinking on the appropriate stance of monetary policy has evolved over recent times.

The Global Picture

Up until around the middle of last year, the global economy was growing quite briskly. Then, over the second half of the year, growth slowed and this lower pace continued into 2019.

There are a few factors that help explain this slowing in the global economy.

The first is a slowdown in the Chinese economy. The Chinese authorities have for some time been seeking to address the build-up of risks in the financial system. As part of their efforts on this front they have sought to rein in shadow banking. The effect of this has been felt across their economy and, given the size of the Chinese economy, the impact has also been felt around the world.