Reserve Bank of Australia Governor Philip Lowe has renewed his warnings that central bankers have limited ability to cushion the global economy from the headwinds of mounting political uncertainty.
“We are experiencing a period of major political shocks,” Dr Lowe said, citing developments in America, Brexit, Hong Kong, Italy and elsewhere. “Political shocks are turning into economic shocks.”
Infrastructure investment and structural reform in economies around the world would have much greater impact than cutting interest rates, he told the audience.
But politicians are reluctant to act, he said adding that ending the political uncertainty would also bring benefits.