Reserve Bank of Australia Governor Philip Lowe gave a speech earlier today:

Followed by Q&A:

From Australia's public broadcaster, the ABC:

  • Reserve Bank governor Philip Lowe has revealed the central dilemma the Reserve Bank confronts
  • It would like lower interest rates to boost the economy, but it cannot cut rates because it would add further fuel to the hot Sydney and Melbourne property markets.

here's the dilemma (in Lowe's words):

  • "We'd like the economy to grow a bit more quickly and we'd like the unemployment rate to come down a bit more quickly than is currently forecast.
  • But if we were to try and achieve that through monetary policy it would encourage people to borrow more money and it probably would put more upward pressure on housing prices and, at the moment, I don't think either of those two things are really in the national interest."

Link to the ABC piece: Reserve Bank interest rate moves limited by high debt, rising house prices

More, this time from the Sydney Morning Herald ...

And, the Australian Financial Review (may be gated): RBA's Philip Lowe warns of 'sobering combination' of high debt, weak wages