Australia has not had a recession in 25 years, and the central bank is part of that huge achievement. The central bank has been able to keep interest rates low or near negative territory. It doesn't strictly aim for a two percent inflation rate. Instead, the central bank aims for two to three percent inflation averaged over the business cycle. It is amazing to see that the Australian central bank puts so much importance to average over the inflation time that it actually works for the Australian economy.
https://www.weforum.org/agenda/2016/09/australia-hasnt-had-a-recession-in-25-years-this-is-what-the-rest-of-the-world-can-learn?utm_content=buffer10fdc&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
I find it very fascinating that Australia has not had a recession in the last 25 years, showing how vital the central banks role is towards the economy of a country in controlling inflation.
ReplyDeleteFor the central bank to have such a massive role in how a country's economy looks like is very impressive. Just shows that the people running our banks are just as important as the politicians trying to run the country.
ReplyDeleteIt is interesting to see how the Central bank's lower interest rates and a healthy inflation rate of 2%-3% has stabilized the economy of Australia. They have had steady growth in the GDP from 1980-2015. It has had its ups and downs in the unemployment rate. The unemployment rate has no relation to the state of the economy. It is interesting to note whether Australia will ever go into a recession in the next couple of years.
ReplyDeleteI find very interesting the role of the central bank in Australia and how well they have managed to keep their country in a good economic shape and out of a recession for 25 years. I would like to know why other countries are not following what they are doing and why. I understand that it would work differently in every country but it would be interesting to see if a model with less inflation as the target would work in a country like the US where it seems like the economy has to grow a lot or people think that they are just not doing well.
ReplyDeleteI think this outcome does show how well the central ban in Australia is controlling the interest rate, it would be interesting to see if their strategy would keep being effective in the future.
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