Pessimistic views on the economy are misguided because there was “heaps of stimulus” in the pipeline from the Federal Government’s income tax cuts and the Reserve Bank’s two interest rate cuts.
Deloitte Access Economics partner Chris Richardson says in his latest business outlook report that people had misinterpreted the RBA’s interest rate cuts in June and July and the central bank could have done a better job at communicating the reasoning.
Rather than being worried about a sharp economic downturn, the RBA wanted to create more jobs and boost wage growth, the Canberra-based economist says.
Richardson says while there are challenges from a slowdown in consumer spending, low wage growth and global trade stalling, there is “heaps of stimulus and it’s arriving fast” in Australia.
“The election result reduced policy uncertainty, there are big tax cuts hitting pockets in a few weeks, there’s interest rate cuts, plus reduced pressures on bank funding costs, a loosening of the noose on lending for housing by the regulators, plus a modestly lower Australian dollar,” he says.