RBA’s Lowe Urges Government Action

Australian central bank Deputy Governor Philip Lowe urged vigilance on asset prices inflated by record-low interest rates and said government action is needed to encourage companies to invest.

“Very low global interest rates have been with us for some time. And it is likely that they will stay with us,” Lowe said in a speech in Sydney late yesterday. “But the longer it runs on without a pickup in the appetite for real investment, the greater is the potential for new risks to develop.”

His remarks reflect rising concern at potential fallout from maintaining rates near zero in the U.S., euro zone, Japan and U.K., which is encouraging investors to take ever-greater risks to boost returns. The Reserve Bank of Australia, which cut its benchmark to a record low 2.5 percent last year to spur business spending and hiring, is grappling with a surge in investment in Sydney’s property market.

Bloomberg

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