RBA Looking to Support Demand Growth

Australia’s monetary policy setting is currently configured to support growth in demand, a senior Reserve Bank of Australia (RBA) official said on Monday.  Low interest rates should temporarily raise the disposable incomes of those with debt, but also lower incomes for those reliant on interest-bearing assets, said Christopher Kent, RBA Assistant Governor.

“This is stimulatory nonetheless, in part because the household sector is a net debtor overall,” said Kent, who is responsible for the Bank’s Economic Analysis and Economic Research Departments.  Australia’s cash rate is at a record low 2.5 percent, where it has been since the last interest rate cut in August last year.

Speaking at the Leading Age Services Australia National Congress in Adelaide, Kent focused the bulk of his speech on the challenges and opportunities that an ageing population poses to the economy.  He said the RBA can best contribute to the necessary adjustments to population ageing by maintaining low and stable inflation.

Reuters

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