Reserve Bank of Australia chief Philip Lowe said the coronavirus is having a 'significant'effect' on the country's economy
Reserve Bank of Australia chief Philip Lowe said the coronavirus is having a 'significant'effect' on the country's economy

Reserve Bank of Australia Deputy Governor Andrew Hauser has said that the organization is taking cautious steps with interest rates, as economic forecasts are subject to uncertainty, and warned people of "false prophets."

The policymakers are now waiting for more data before announcing any big changes. Hauser, in a speech to the Economic Society of Australia in Brisbane on Monday, warned people of "false prophets," who were too quick to predict what will happen to the monetary policy, which was extremely dangerous, The Australian reported.

"It is right to want to be confident that the central bank will bring inflation back to target and maintain full employment: that is the RBA's mandate and we should be held to account for it," he said. "But the policy strategy required to deliver that outcome, and the economic judgments that inform it, simply cannot be stated with anything like the same degree of certainty. Those pretending otherwise are false prophets."

"And most importantly of all, the things we are forecasting – inflation and unemployment – are the complex, time-varying outcomes of the decisions and interactions between many millions of people, companies and other organisations."

RBA's latest forecasts predict that core inflation will slide from 3.9% in the June quarter to the target range of 2-3% by the end of 2025. Authorities made some small changes to the inflation predictions, but the overall economic scenario was still in a state of limbo, Reuters reports.

"As humans, we are all prone to overconfidence, particularly when forecasting the future. In many cases, the answer we ought to give is that we simply do not know," Hauser said.

"In some cases, uncertainty may induce you to be less activist – as you wait for more data, or try to avoid triggering tail risks through your own actions."

The Reserve Bank of Australia (RBA) has maintained stable interest rates since November, despite rumors. As of right now, the interest rate is high enough to prevent inflation and low enough to encourage the creation of new jobs.

The RBA believes that the present interest rate is appropriate for the time being and is working to strike a balance between promoting employment and containing inflation.