Soaring household debt and housing prices could make it “dangerous” to cut interest rates, the head of the Reserve Bank of Australia says.
Dr Philip Lowe has told a federal parliamentary economics committee that while a deeper cut to the official cash rate could deliver a short-term boost to jobs and inflation but also push already-high property prices and household debt levels to worrying levels.
“Is it really in the national interest to create a little bit more employment growth in the short-run at the expense of creating vulnerabilities which could be quite dangerous in the long term?” Dr Lowe said at the hearing in Sydney on Friday.
He said another rate cut could help drive down the unemployment rate, which could be lower than its c…
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