philip lowe : dinner remarks to a50 australian economic forum dinner remarks by mr philip lowe, governor of the reserve bank of australia, to the a50 australian economic forum, sydney, 9 february 2017. * * * i would like to offer you all a very warm welcome to sydney for the a50 forum. to those of you who have travelled to our shores from afar, thank you for visiting. i am confident that you will find your investment in time a worthwhile one. in just a short period, you will hear from the leaders in the worlds of politics, business, the policy institutions and the investment community. you will find an openness and transparency that is not always seen elsewhere around the world and you will experience a genuine desire to share perspectives. you also find a country that is prosperous and wealthy ; australians enjoy a standard of living that relatively few people around the world enjoy. you find a country that has grown consistently for some decades now, despite a pretty volatile global environment. australia ’ s year - ended growth rate has been in positive territory since 1991. you find a country that has a strong and stable banking system. we have deep and liquid financial markets. the public here question why banks are so profitable, not why they performed so badly during the global financial crisis. you find a country that is well placed to benefit from growth in asia, not only because of our natural resources base, but also because of stronger demand for our food and a wide range of services. you find a country with a growing and diverse population and one that has a high degree of social cohesion. our population has recently been growing at around 1½ per cent a year, and around 40 per cent of us were either born overseas or have one parent born overseas. this brings a dynamism that isn ’ t there in countries with stagnant and less diverse populations. you also find a country with strong public institutions and whose economy is resilient and flexible. we have a demonstrated capacity to address our problems and to adjust to the changing world that we live in. in the past decade, our flexibility has meant that we have been able to maintain economic stability through the biggest investment boom in the resources sector in more than a century, and the subsequent unwinding of that boom. you also find a country with positive interest rates and a conventional monetary policy framework. the central bank is independent, analytical and pragmatic. our inflation target is focused on medium - term outcomes. this approach means that

inflation to increase a bit more quickly, boosted by increases in oil and tobacco prices. we continue to pay close attention to the housing market and to household balance sheets. the picture varies widely across the country. prices for houses in sydney and melbourne are rising strongly, but apartment prices in some cities, including perth and brisbane have fallen. the population is growing strongly, but there is a large number of additional dwellings to come onto the overall market this year. growth in rents is weak, but vacancy rates in most markets are not unusually high. and investor demand looks to have strengthened in the closing months of 2016. so it is a complex picture. one reason for trying to understand this complex picture is that the level of household debt is relatively high. overall, households are coping reasonably well with this. but there are clearly risks. so it is a positive development that over the past couple of years, banks have tightened their lending standards in some areas. this tightening was partly prompted by the supervisory measures put in place by the prudential regulator, apra, and the reserve bank and apra continue to work closely together monitoring developments. 3 / 4 bis central bankers'speeches another issue that we are paying close attention to is developments in the labour market. employment growth slowed over 2016 and the growth that did take place was almost entirely in part - time employment. as is the case with the housing market, conditions vary across the country. looking forward, the number of job vacancies and job ads suggest that some strengthening in employment growth might be in prospect. our central forecast though is for the unemployment rate to remain close to its current level for some time to come. in summary then, the bank ’ s central scenario is for some pick - up in economic growth and for inflation to move gradually higher. as always, though, there are risks around that outlook. as our record demonstrates, our economy does have a degree of resilience and flexibility that has allowed us to maintain stability during a pretty difficult time in the global economy. there is no reason that this can ’ t continue. but we do need to continue to build that resilience, while we take advantage of the considerable advantages that we have as a nation. thank you. welcome again. i hope you enjoy your time in australia. 4 / 4 bis central bankers'speeches