Get 40% Off
👀 👁 🧿 All eyes on Biogen, up +4,56% after posting earnings. Our AI picked it in March 2024.
Which stocks will surge next?
Unlock AI-picked Stocks

Australian interest rates need to be expansionary -RBA

Published 11/10/2018, 09:43 am
Updated 11/10/2018, 09:43 am
© Reuters.  REFILE-Australian interest rates need to be expansionary -RBA

(Refiles to remove extraneous word from headline)

SYDNEY, Oct 11 (Reuters) - Australian interest rates need to be set at expansionary levels to help the economy absorb spare capacity in the labour market, a process that can take several years, a top central banker said on Thursday.

Reserve Bank of Australia (RBA) Assistant Governor Luci Ellis said a falling unemployment rate was a sign that low rates were working to drive growth above trend.

"It can take a while for spare capacity to be absorbed," said Ellis, who heads the bank's economic department. "Therefore policy settings might need to be expansionary for a number of years."

Rates have been at a record low of 1.5 percent since mid-2016, and the bank has indicated they will remain there for some time yet.

In a speech to the Melbourne Institute, Ellis also drew attention to "superstar firms", those that were so productive they pulled far ahead of others in the industry with the result that markets became more concentrated.

"There is a concern here," said Ellis. "The market leader begins to reap monopoly profits, which isn't good for consumers and might not be good for long-run innovation and welfare."

The latest innovations such as machine learning and artificial intelligence could accelerate this concentration by becoming a barrier to entry.

"Using machine learning and other emerging techniques to automate routine business processes seems to involve specialist skills and, often, PhD-level training in statistics or computer science," said Ellis.

"These skills are much rarer and take longer to develop than those required for the jobs that are thereby replaced."

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

As a result, laggard firms may never catch up, leaving the "superstars" to gain ever more market share.

"If incumbents never face rivals, they are more likely to become complacent. Innovation could slow down, and growth in living standards with it," she warned.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.