9 / 14 / 21, 1 : 55 pm delta, the economy and monetary policy | speeches | rba speech delta, the economy and monetary policy philip lowe [ * ] governor address to the anika foundation online – 14 september 2021 thank you for joining us today to support the anika foundation. this afternoon, i would like to talk about the implications of the pandemic for the economy and for monetary policy. but before i do that, i want to acknowledge the impact of the pandemic on young people. the past 18 months have been very difficult for young australians. their support networks have been disrupted, leaving many young people feeling isolated and anxious about the future. many have also missed out on events that would normally frame their lives, such as celebrating achievements with their peers. their education has also been disrupted and, for many, it has been harder to get that valuable support that a one - on - one connection with a teacher can provide. so, our young people are paying a heavy price. this is evident in the increasing incidence of mental health issues and the sharp rise in calls to support services. it is important that we remember this high price when we conduct a full accounting of the costs of the pandemic and the containment measures. it is in this context that i want to thank you again for your support of the anika foundation. the foundation is doing important work in supporting the welfare and mental health of young people. thank you for being part of that work. i would now like to turn to the economy and then monetary policy. the economic outlook on the economy, our central message is that the delta outbreak has delayed – but not derailed – the recovery of the australian economy. the outbreak is a significant setback for the economy and it has introduced an additional element of uncertainty about the future. but there is a clear path out of the current difficulties and it is likely that we will return to a stronger economy next year. https : / / www. rba. gov. au / speeches / 2021 / sp - gov - 2021 - 09 - 14. html 1 / 14 9 / 14 / 21, 1 : 55 pm delta, the economy and monetary policy | speeches | rba prior to the delta outbreak, the australian economy had considerable positive momentum. domestic final demand increased by 1. 7 per cent in the june quarter to be more than 3 per cent above its prepandemic level. gdp was 0. 7 per cent higher in the june quarter

it is also worth noting that other australian industries have been very profitable over this period. if we adjust for the unusually low bad debts of recent years, the profitability of australian banks falls back to around the middle of the international range. overall, when we look at all the evidence, we think it is reasonable to conclude that the australian financial sector is competitive, and that its performance measures up quite well across a range of international benchmarks. some commentators have recently been concerned that the financial turmoil of the past year has lessened the degree of competition. this is because the turmoil has made it harder for lenders who fund themselves in capital markets to compete. some have argued that this requires some type of government intervention in the market, such as setting up a government guaranteed securitisation vehicle. while it is true that lenders relying on securitisation have lost market share in recent months, it has always been the case that some phases of the economic cycle favour some forms of financing more than others. securitisation had been strongly favoured over the previous five years of very low global interest rates ; now it is at a disadvantage. our view of recent events is that they are cyclical in nature rather than a permanent change to the structure of the market, in the sense that when market conditions settle, securitisation will pick up again. as such, it would be premature at this stage to embark on proposals such as the setting up of new government bodies to support certain forms of financial activity. the best way for the government to promote a competitive financial sector in the long run is to ensure : • first, that regulations do not unreasonably impede new entrants ( since history shows that it is new entrants that drive competitive behaviour ) ; • second, that users of financial services have good access to information about the range and cost of services available. it is also important that this information be in a form that is easy to understand ; and • third, that switching between service providers be as costless and easy as possible. i will end my opening remarks here, and phil and i would be very pleased to answer any questions you may have. thank you.