The simplest reason is that Australia has a higher inflation target and is willing to average that target over the business cycle. Whereas the US has a lower in

The simplest reason is that Australia has a higher inflation target and is willing to average that target over the business cycle. Whereas the US has a lower inflation target and treats that target as an upper bound. So in the 2007 recession for example, the Fed was trying to figure out how to push against the zero lower bound, and then despite a period of very low inflation, has refused to allow any catch-up growth that might take the inflation rate temporarily over 2%. "So what is it that has kept Australia's economy from shrinking? ...It's that Australia has been able to cut interest rates when it has needed to. Other countries haven't, you see, because their interest rates are already as low as they can go at zero or even slightly negative territory. ...[Australia] doesn't have a 2 percent inflation target. It has a 2 to 3 percent inflation target averaged over the business cycle. ...The result is that interest rates have been much higher in Australia than in almost any other rich country." https://www.washingtonpost.com/news/wonk/wp/2016/09/15/how-australia-has-avoided-a-recession-for-25-years/?utm_term=.969c5d023931 https://www.washingtonpost.com/news/wonk/wp/2016/09/15/how-a...