An article in The Australian (Aussie national paper) gives a recap of the Reserve Bank of Australia's Philip Lowe speech, saying rate cuts are losing the ability to stimulate the economy, and warning that it is up to the government to step up measures to help revitalise growth.

  • Lowe said consumers, businesses and governments were not responding to the extraordinarily low interest rates
  • Said rate cuts were having little effect on household consumption because retirees and other savers were being forced to cut back their spending and their income fell in line with rates, while people with debts were using lower rates to accelerate repayments rather than raising their spending
  • Said monetary policy was becoming less effective worldwide
  • Although monetary policy was less effective than it once was, it was still helping to support the Australian economy

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The headlines from Lowe yesterday, which moved the AUD on the session, are here:

  • RBA's Lowe: RBA board noted further easing may be appropriate

and

  • More from RBA's Lowe: Scope to lower interest rates if appropriate