Inflation has changed and is unlikely to behave the way it did in the pre-pandemic era, according to former Reserve Bank of Australia Governor Philip Lowe.
Speaking to ANZ Group Chief Economist Richard Yetsenga on the sidelines of the 2024 ANZ Debt Conference, Lowe said the stable, low inflation seen in previous years had been left behind in the modern economic landscape.
“We’ve moved to a different world now,” he said. “China is no longer a source of major disinflation and the dynamics around competition are different.”
That’s created an economy “in which inflation is more variable than it used to be, and we have to adjust policy to deal with that”, Lowe said.
Lowe was a guest of ANZ at the annual conference, which attracted more than 350 people. You can watch a video of the conversation below.
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Lowe said lifting productivity growth was critical for Australia’s future, and needed to be a priority for both businesses and policymakers.
“Australia has benefited for decades from reasonably good productivity growth and high commodity prices,” he said.
“In the future, commodity prices probably aren't going to keep rising, so it's going to come back to productivity growth [and] getting better at doing things.”
