Policy is kicking to RBA’S rhythm

Cormann FINANCE insists Minister the Mathias Federal s

l Government is “kicking in the e bank same in direction” trying to as shore the central up the l economy.

The Reserve Bank of Aus- tralia on Tuesday cut the official cash interest rate by 0.25 percentage points, for the second consecutive month, to a historic low of 1 per cent to boost activity.

But RBA Governor Philip Lowe also stressed easier monetary policy was not the only way to drive the economy and highlighted the steps the Government could take.

“One option is fiscal support, including through spending on infrastructure,” Mr Lowe said in a speech hours after the rate cut. “Another option is structural policies that support firms expanding, investing, innovating and employing people. A strong, dynamic, competitive business sector generates jobs.”

Senator Cormann ( pictured) said the Government was on the RBA’S wavelength.

“We are kicking in the same direction as the Reserve Bank is, to ensure that we continue to build a stronger economy and can continue to create more jobs,” he said yesterday.

The minister pointed to the Government’s growth policies including its ambitious freetrade agenda and $158 billion tax cuts package. The Coalition is also spending on infrastructure and bringing in reforms to lower power costs.

Th The A Australian economy faces global headwinds and local challenges, including the impact of the drought and flooding, soft consumer spending and rising unemployment.

“Our Budget was put together in the context of all of the economic information that the Reserve Bank is acting on as well. It is a pro-growth budget,” the minister said.

But Labor shadow treasurer Jim Chalmers argues the Government isn’t doing enough and the RBA rate cuts prove it.

“We need the Government to recognise that the economy is floundering and middle Australia is struggling,” he said in Canberra. “And we need a government which is actually prepared to do something about it.”

Meanwhile, only one of the big four banks – ANZ – has promised to pass on all of Tuesday’s 0.25 percentage point central bank cut to its variable home loan customers.

Commonwealth Bank and NAB will cut by 0.19 percentage points, while Westpac will cut its rate by 0.20 percentage points.