(Bloomberg) -- Australian central bank chief Michele Bullock said it’s too early to judge the impact of President-elect Donald Trump’s policies as it remains unclear what he will actually end up implementing.
“We can’t be jumping at sort of shadows,” the Reserve Bank governor said during a panel discussion in Sydney on Thursday. “What ultimately happens for Australia is going to depend on the responses of other countries,” she said, adding “we don’t know how other countries are going to respond to tariffs.”
The US president-elect has threatened to implement 60% tariffs on exports from China, Australia’s biggest trading partner, as he seeks to bolster American manufacturing and hiring. The prospect of an expanded trade war during Trump’s second term is raising expectations for greater stimulus from Beijing going into next year, as China braces for a new era of protectionism.
“Ultimately, it’s not good for the Chinese economy,” Bullock said of any potential tariff measures. “It isn’t good for us either. So I think there’s lots of things to think about here.”
The RBA chief said most central banks are remaining focused at the moment on “what they know,” which is that inflation is coming down, though only slowly.
Australia’s central bank has been trying to bring down consumer prices while holding onto gains in the labor market. It opted not to raise interest rates as high as peers and as a result inflation is taking longer to return to its 2-3% target even as the jobless rate remains historically low.
“We’re not as restrictive as others, even as they are lowering their interest rates,” Bullock said. “We think we’re restrictive enough and we’re going to stay restrictive enough until we think we’ve definitely got that downward trajectory” on inflation.
Bullock also said central banks across the world face risks ahead from more supply-side shocks ranging from geopolitics to climate and others. She also said she doesn’t see a role for Bitcoin in Australia’s economy or payments system.
--With assistance from Harry Brumpton.
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