RBA’s Lowe: We Retain Rate-Cut Scope

Australia retains scope to lower interest rates further, the central bank’s second in command said, while warning against spurring a debt-fueled spending boom.

“There is a fairly fine line to tread” in balancing the need to encourage household spending and business investment while preventing imbalances emerging in the economy, Deputy Governor Philip Lowe said in Sydney Monday. Australia has been trying to engineer a transition from mining since late 2011 when investment and commodity prices peaked.

Responding to an audience question on the policy outlook after his speech, Lowe said “nothing has changed” despite the central bank not having provided future guidance when it cut rates to a record-low 2 percent on May 5. “We still have scope to lower interest rates if we need to. That doesn’t mean we’re going to, but we have scope to do that,” Lowe said.

Bloomberg

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