“As long as interest rates are lower than trend growth, the cost of servicing the debt will fall as a proportion of GDP, and the debt burden will fall as growth picks up.”
Bendigo and Adelaide Bank CEO Marnie Baker said the federal budget deficit and sharp rise in government debt were “both affordable and necessary, and helped by Australias AAA credit rating and record low interest rates”.
Ms Baker said the flip side of low borrowing costs was low deposit rates, “which is a huge challenge for savers including self-funded retirees”.
Another banker, National Australia Bank CEO Ross McEwan, said Australia was fortunate to go into the COVID-19 crisis with low levels of government debt.
“We now need to transition from support to stimulus, to…
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