RESERVE Bank governor Philip Lowe has warned of an extended period of economic uncertainty for Australia as the nation seeks to curtail the impact of COVID-19.

The RBA has just released its annual report into the bank’s activities over the past 12 months, also taking a look at what lies ahead.

“The economic outlook remains highly uncertain and is dependent upon the efforts to contain the virus,” Mr Lowe said.

“It is likely, though, that Australia will experience relatively high unemployment over the next couple of years and that inflation will be below target,” he said.

“Addressing the high rate of unemployment will be an important national priority.”

Mr Lowe said addressing unemployment would require ongoing support to aggregate demand through fiscal and monetary stimulus.

“Structural reforms that help Australia be a great place for businesses to invest, innovate, expand and hire people also have an important role to play,” he said.

“Both prior to and during the pandemic, a priority for the Reserve Bank has been to invest in our banking and payment systems to make sure that they are secure, stable and efficient.

“We are also focusing on how we can best benefit from the larger and more complex sources of data that are now available.”

Australian Chamber of Commerce and Industry chief executive, James Pearson, said the RBA governor’s comments highlighted why all governments needed to ensure the necessary testing, contact tracing and quarantine approaches for dealing with the virus.

“Until we have a widely available vaccine, the strength of the economic recovery will depend on our ability to successfully prevent outbreaks of COVID undermining the confidence of households to spend and businesses to invest and employ people,” Mr Pearson said.

“Given the uneven impact of the virus on households and businesses across the economy, it is important that Federal and state and territory governments continue to provide fiscal support where it is most required,” he said.

“Without this support the economic recovery will take longer and the scarring of the economy will be deeper.”

The RBA annual report can be read here.