Addressing the Anika Foundation on Tuesday, Reserve Bank (RBA) Governor Phillip Lowe said even despite signs of recovery, the path forward for the labour market was uncertain.
"This is because many of the people who lost their jobs over recent times have been classified as not in the labour force and so are not counted as unemployed," Dr Lowe said.
"As the labour market continues to improve, we expect many of these people will start looking for jobs, and thus be classified as rejoining the labour force.
"This will push up the measured unemployment rate at the same time that the share of the working-age population with a job is also rising."
Need somewhere to store cash and earn interest? The table below features introductory savings accounts with some of the highest interest rates on the market.
Provider | |||||||||||||
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4 | 0 | 0 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | ||||||
FEATURED | High Interest Savings Account (< $250k)
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High Interest Savings Account (< $250k)
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0 | 1000 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
FEATURED | Savings Maximiser (<$100k)
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Savings Maximiser (<$100k)
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0 | 1000 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
FEATURED | Saver Account (<$250k)
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Saver Account (<$250k)
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4 | 0 | 0 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | ||||||
Savings Account (Amounts < $250k)
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Savings Account (Amounts < $250k)
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0 | 2000 | 1 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Home Saver
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Home Saver
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0 | 200 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
No monthly fees | Save Account
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Save Account
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0 | 2000 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
HomeME Savings Account ($0 - $100,000) | |||||||||||||
0 | 200 | 1 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Growth Saver ($1 - $25k) | |||||||||||||
0 | 1000 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Target Saver | |||||||||||||
0 | 1000 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
For customers aged 14-35 years | |||||||||||||
Future Saver Account ( < $50k) | |||||||||||||
0 | 500 | 1 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Goal Saver
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Goal Saver
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0 | 1000 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Boost Saver | |||||||||||||
0 | 0.01 | 1 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Reward Saver Account (31 years +) ($0-$100k) | |||||||||||||
0 | 100 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Bonus Saver Account (Amounts < $100k) | |||||||||||||
0 | 20 | 1 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Reward Saver Kick Start (Amounts ≤ $1m) | |||||||||||||
0 | 0.01 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Life (< 30 years) (Monthly deposit) | |||||||||||||
5 | 0 | 0 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | ||||||
NetBank Saver | |||||||||||||
0 | 0 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
ANZ Save | |||||||||||||
0 | 5 | 0 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Young Saver Account | |||||||||||||
0 | 50 | 1 | $product[$field["value"]] | $product[$field["value"]] | $product[$field["value"]] | More details | |||||||
Save up |
Dr Lowe said until scientific breakthroughs were made or we become better at managing the virus, incomes would be temporarily lower.
He also said although the figures in April and May - which showed employment fall by around 870,000 people - were staggering, Australia had now turned the corner.
"In June, hours worked increased by 4% and the number of employed people rose by 210,000," he said.
"Notwithstanding this turnaround, the path ahead is expected to be bumpy and there are some major cross-currents in the labour market at the moment."
Prime Minister Scott Morrison today announced a tapered extension to JobKeeper and JobSeeker, and Dr Lowe said both schemes were vital for recovery.
"By helping the economy today, these measures also support the all-important confidence that I spoke about earlier," he said.
"So they assist with a return to more normal patterns of spending and consumption, without the need for ongoing fiscal stimulus."
Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner-occupiers.
Lender | |||||||||||||
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Variable | More details | ||||||||||||
FEATUREDOnline ExclusiveUp To $4K Cashback Includes NOV RBA Rate Increase | loans.com.au – Variable Basic Cashback Home Loan (Principal and Interest) (LVR < 70%)
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loans.com.au – Variable Basic Cashback Home Loan (Principal and Interest) (LVR < 70%)
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Variable | More details | ||||||||||||
FEATUREDRefinance OnlyApply In Minutes | Unloan – Variable Rate Home Loan – Refinance Only
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Unloan – Variable Rate Home Loan – Refinance Only
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Variable | More details | ||||||||||||
FEATURED | Up – Up Home Variable (Principal & Interest) (LVR ≤ 90)
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Up – Up Home Variable (Principal & Interest) (LVR ≤ 90)
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- Immediate cashback upon settlement
- $2000 for loans up to $700,000
- $4000 for loans over $700,000
"There's no free lunch"
Dr Lowe also used his address to rule out the possibility of Modern Monetary Theory (MMT), whereby the RBA deposits money in every bank account in Australia, also known as helicopter money.
The RBA has the ability to create money and avoid financial constraints, offering a free lunch of sorts.
"So the argument goes, if the government needs money to stimulate the economy, the central bank should simply create it in the public interest," Dr Lowe said.
"The reality, though, is there is no free lunch. The tab always has to be paid and it is paid out of taxes and government revenues in one form or another."
Dr Lowe said helicopter money could push inflation up too drastically, so the central bank would have to hike the cash rate, meaning the general population would end up funding the system.
"So I want to make it very clear that monetary financing of fiscal policy is not an option under consideration in Australia, nor does it need to be," he said.
"The Australian Government is able to finance itself in the bond market, and it can do so on very favourable terms."
Dr Lowe reaffirmed the Board had no appetite for negative interest rates in Australia, as it would encourage people to save more, rather than spend more, which is not the direction we needed to head in.