Reserve Bank of Australia Governor Glenn Stevens said he is unwilling to drive house prices even higher to try to reduce unemployment faster, indicating policy makers are content to keep interest rates on hold.
“In our efforts to stimulate growth in the real economy, we don’t want to foster too much build-up of risk in the financial sector, such that people are overextended,” Stevens said in the text of a speech to be delivered in Adelaide today. “The more prudent approach is to try to avoid, so far as we can, that particular boom-bust cycle.”
The RBA cut rates by 2.25 percentage points from late 2011 through August 2013 to a record-low 2.5 percent to spur domestic-driven growth in industries including house building to compensate for weakening mining investment. A high currency has impeded that transition and the nation’s unemployment rate jumped to a 12-year high of 6.4 percent in July.
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