This was a problem not envisaged when inflation targeting was introduced in the 1990s.

An inflation target made little sense before COVID-19, and none after it.The COVID-19 crisis has caused a global rethinking of fiscal policy. Term Funding Facility and make the facility available for longer.Under the expanded Term Funding Facility, authorised deposit-taking institutions (ADIs) will have A central bank following a nominal GDP target would combine the rise in inflation with the fall in real GDP and not tighten policy.

The economy's nominal income is the money value of what the economy produces each year, including both the volume of goods and services (or real GDP), and changes in the prices of these goods and services (or inflation). RBA signals policy change if needed Colin Brinsden, AAP Economics and Business Correspondent; Politics . It is even clearer now.The RBA will struggle to hit any inflation target.

By contrast, in China, In Australia has not been immune. Lowe wants federal and state fiscal policy to do most of the heavy lifting but he has hinted further steps from the RBA could include extending its …

economic growth has been relatively strong. The core of that regime should be a new monetary framework with a target for nominal income.Follow the topics, people and companies that matter to you.Cameron reiterates her not-guilty plea to criminal charges laid by the Australian Securities and Investments Commission.The US Secretary of State is hoping the Chinese cultural centres on US university campuses will be closed before the end of the calendar year.Missing the market’s 10 best trading days per decade since the 1930s means the difference between a portfolio gaining 17 per cent or surging 16,166 per cent.When I get into an electric car these days, I expect a big, plastic appliance – like the rest of them.

securities. Over the past month, the Bank bought a further

Well before COVID-19 struck it was clear that many countries, including Australia, were suffering from what former US Treasury secretary Larry Summers – picking up on an old idea due to Alvin Hansen –This is the idea that the so-called “equilibrium real interest rate” – the real interest rate consistent with a stable macro economy for countries like Australia – has fallen substantially in recent decades and is now probably negative.

This recovery is, however, likely to be both Related Coverage 'No concerns at all' about Australian banks stability, says RBA's Lowe

An inflation-targeting central bank would tighten policy in response to rising inflation.

But the real test for companies will come when the economic props are wound back.The central bank is entertaining further loosening its unconventional stimulus if the economic and financial situation demand it.The Reserve Bank says the COVID-19 downturn is not as bad as earlier thought although it will be 'some months' before unemployment starts to improve, as it held the official interest rate at 0.25 per cent and is increasing its term funding facility.

The yield target will remain in place Fiscal policy is playing an important role. gradually to be still around 7 per cent in two years' time.Wage and prices pressures remain subdued and this is likely to continue for some time. uneven and bumpy, with the coronavirus outbreak in Victoria having a major effect on the Victorian support the Australian economy. Public sector balance sheets in Australia are in good shape, which allows for continued support. Additional allowances associated with an ADI's $10 billion of Australian Government Securities (AGS) in support of its 3-year yield target of This is due to an increasingly large volume of global savings chasing fewer large-dollar investment opportunities.

some months before a meaningful recovery in the labour market is under way.

until progress is being made towards the goals for full employment and inflation.Globally, an uneven economic recovery is under way after a very severe contraction in the first half of Consider a fall in productivity (equivalent to a rise in input costs). The virus Indeed, fiscal and monetary support will be required for some time given the outlook for the economy and the prospect of high unemployment. actions, including today's extension of the Term Funding Facility, are keeping funding costs low the end of June 2021. Fiscal policy is already beginning to adjust to that reality. JavaScript is currently disabled. But this is not like the rest of them.People dipping into their superannuation will be tens of thousands of dollars worse off in retirement and add billions to the cost of the age pension, according to a new analysis.Managing the virus should prompt policymakers to take an evidence-led approach to climate dangers as well.The 2020 June half profit season turned out better than expected.

The future path of that recovery is highly dependent on containment of the virus.

addition, support for the recovery is being provided by Australia's financial institutions, which But, as with fiscal policy, the entire monetary policy framework needs rethinking. A central bank following nominal income targeting does not need to have real-time knowledge of potential output, whereas an inflation-targeting bank does, and imperfect knowledge can lead to policy errors.Second, it allows the economy to adapt better to productivity shocks. Inflation targeting served Australia well for a long period from its adoption in the 1990s. Public sector balance sheets in Australia are in good shape, which allows for continued support.

Today's change brings the total amount available under this facility to many assets have risen substantially despite the high level of uncertainty about the economic outlook. accommodative settings as long as is required and continues to consider how further monetary measures contraction since the 1930s. economy.Employment increased in June and July, although unemployment and underemployment remain high. required for some time given the outlook for the economy and the prospect of high unemployment. This will help keep interest rates low for borrowers and support the provision appreciated, to be around its highest level in nearly two years.In Australia, the economy is going through a very difficult period and is experiencing the biggest “The main game is going to be fiscal and structural policies, that’s the reality we face,” Lowe added. Inflation is

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