The bank kept official interest rates at an equal record low of 0.75 per cent at its February board meeting on Tuesday,tipping the economy to grow 2.75 per cent this year despite the impact of the summer's bushfires and the outbreak of coronavirus.
Dr Lowe said the bank believed the fires would likely cut GDP across the December and March quarters by 0.2 percentage points while the drought would hurt growth by 0.25 percent through the year. It was too early to determine the full impact of the coronavirus.
He said last year's rate cuts were being used by households to pay down their debt,particularly mortgages,which would help free-up consumption going forward.
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But the governor used a key part of his speech to warn while the economy's fundamentals were sound,"strong and consistent growth"would require the nation to invest in its future.
Dr Lowe said investment spending had trended down over recent years which was compounding lower productivity growth.
"We have experienced a troubling decline in productivity growth. While the reasons for this are complex,it is hard to escape the conclusion that higher levels of investment spending would promote productivity growth and our collective living standards,"he said.