The assistant governor of the Reserve Bank of Australia, Philip Lower said that near record terms of trade in the country were helping the boom in investments and profits. People were hiring more workers despite the rise in wages due to the high levels of productivity and profitability in the current time frame.
He was uncertain of just how long the boom in the terms of trade would last. However it was clear that the terms of trade at present were 90% more than the average terms of trade for Australia in the 1990s. He said that the boom was being driven by structural changes to the global economy.
Mr Lowe said that this is why there was a trend of rapid growth in some industries and hardly any in others. For instance the mining and related services were growing exponentially while the sectors such as tourism and manufacturing were not seeing such high growth trends. He added that the most important contribution the Reserve Bank can make to this task is to keep inflation low and stable.
Mr Lowe also said that the extra income that was coming into the economy was also being invested rather than spent as income levels for families rose. This was also contributing to the decline in the price of many manufactured goods. He expected the boom to last at least another year before things changed.