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SYDNEY, Feb. 3 (Xinhua) -- Reserve Bank of Australia (RBA) Governor Philip Lowe told reporters on Wednesday that the impact of COVID-19 restrictions on the local economy had been less severe than previously feared, although supportive measures remained necessary on the road to recovery.
Lowe credited the Australian public and governing systems with coping well under the pandemic, preventing a wider outbreak and putting the country in a better position than those with higher disease rates.
In the past seven days, Australia recorded just one locally acquired case of COVID-19, which was linked to the quarantine of overseas arrivals.
"As is increasingly clear from experience both here and overseas, the health of the population and the health of the economy are inextricably linked," Lowe said.
"Our public administration and health systems have worked well in the public interest. Governments responded quickly to the pandemic and decisive fiscal and monetary policy responses have helped many people."
Limiting movement across domestic borders and implementing targeted lockdowns helped Australia avoid a broader outbreak of the virus, but drew criticism for hampering economic activity.
However, Lowe said economically, the cost has not been as severe as was feared as Australians adapted to the changing circumstances.
"The lockdowns and the restrictions have not been as depressing on spending activity as we thought they would be. What we discovered, and we probably should have known this, is that people find other ways to spend their money and to do their business," he said.
"Across many indicators, including GDP, the outcomes have been better than our central forecasts and often better than our upside scenarios as well. Employment growth has been strong, as have retail sales and new house building."
Australia's unemployment rate finished last year at 6.6 percent, compared to RBA predictions of up to 10 percent.
Lowe pointed out that the situation was not entirely rosy for Australia, with government fiscal policy support accounting for an estimated 15 percent of GDP. Inflation also remained well below the target rate of 2-3 percent and wage growth was at its lowest point in decades.
Lowe predicted that inflation and wage growth pressures would stay with Australia over the coming years, and therefore the official interest rate would remain at a record low of 0.1 percent until at least 2024, without going into negative territory.
In addition, the RBA announced the day before it would extend its quantitative easing program in the form of purchasing an additional 100 billion Australian dollars (76.1 billion U.S. dollars) worth of government bonds starting from mid-April when the existing bond purchasing program expires.
"It is going to be some years before the goals for inflation and unemployment are achieved...so it is premature to be considering withdrawal of the monetary stimulus," Lowe said.
Looking forward, Lowe said the rollout of vaccines in Australia and around the world would greatly assist with a return to normal but potential setbacks.
"This outcome is not assured, the global rollout of the vaccines faces challenges and there are a range of other uncertainties about the global economy, including trade tensions," he said.
"We hope for the best here, but we also need to be prepared for further setbacks in what remains a highly uncertain world." Enditem