Reserve Bank of Australia Governor Glenn Stevens delivered his semi-annual testimony to a parliamentary panel in Brisbane today in which he indicated lower interest rates were unlikely to accelerate growth; rather, what the economy needed was a release of “animal spirits.”
Interest rates, which have been unchanged at a record-low 2.5 percent for the past year, are unlikely to be adjusted. “I’ve allowed the horse to come to the water of cheaper funding. I can’t make it drink,” Stevens told the committee of lawmakers.
“The governor’s testimony indicates that other issues, besides monetary policy, are holding growth back,” said Michael Workman, a senior economist at Commonwealth Bank of Australia. “Namely, a consistent and sustained lift in business confidence is required which would lead to higher non-mining business investment. The shift to more risk aversion by households and business restrains economic growth.”
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.