The chief economist at one of Australia's biggest banks says further interest rate cuts will be needed to prevent unemployment rising and to boost underperforming sectors of the economy once the mining investment boom peaks later this year.
ANZ chief economist Warren Hogan said the Reserve Bank of Australia will need to cut the cash rate further in 2013.
He said inflation remained at the bottom end of the RBA's two-to-three per cent target range, while jobs growth remained weak, and the economy was expected to struggle in the second half of 2013, once mining investment peaks.
"All we are pointing out is that in 2013/14 the gap will be in how quickly the non-mining economy can quick up versus the mining (economy) and I would say that the gap can only be so long," he told a Committee for Economic Development of Australia (CEDA) forum in Sydney.
"It's unacceptable to the Australian people that in the absence of high inflation, in the absence of any potential asset bubbles or credit bubbles, that the RBA would leave interest rates well above global levels.
"In the presence of what is already quite a soft labour market we shouldn't be sacrificing too much in the way of employment when inflation is low, when house prices are steady, in order to keep interest rates at some perceived level."
Mr Hogan said that though the RBA's cash rate, currently at three per cent, was at its equal lowest level in a generation, mortgage and term deposit rates were considerably higher.
"Interest rates in our economy, if you make a broad judgment are about five per cent, that's not dangerously low in any shape or form," he said.
ANZ has forecast there will be four RBA interest rate cuts in 2013, which would take the cash rate to 2 per cent.