RBA governor says government must spend to limit severe 'economic scars’

Philip Lowe backs government spending but warns against the Reserve Bank creating money saying there is no free lunch'

Australia would risk long-term economic and social scars" without the government borrowing to fund programs aimed at reducing the severity of the Covid-19 downturn, the head of the central bank has said.

The Reserve Bank governor, Philip Lowe, said in a speech on Tuesday that the path ahead in the jobs market was expected to be bumpy" and he emphatically backed the need for government spending to limit the damage to the economy.