The Importance of Monetary Policy

Fiscal policy is not as nimble as monetary policy. Good policy might get shifted by horse trading in the Senate, so we don't have the optimal policy to manage demand. A good example of that is the home builder episode from 2020. At the time, it seemed like a greater deal to support the construction sector,. giving money to households to renovate or build new houses. In the end, it's been a really poor policy. It's actually contributed to highConstruction companies are facing much higher costs. So it was good intent, but in the end, badly designed and badly timed. If Philip Lowe had been a politician, there's been protesters outside of the RBA. I