RBA Governor says Australian cash rate won't fall to zero

RBA Governor says Australian cash rate won't fall to zero
Jonathan ChancellorSeptember 21, 2016

The new RBA Governor Dr Philip Lowe says Australia is not likely to cut interest rates to zero.

And it won't have to use the quantitative easing used by other countries, he told his first House of Representatives economic committee hearing.

Dr Lowe says the RBA is very unlikely to "run out of monetary room."

He said there was no need for "incredibly unusual things."

Dr Lowe says some argue he should be cutting rates further to get inflation back up inside the two to three percent target range.

But he says that might blow up an asset price bubble which would be "irresponsible".

On housing Dr Lowe says the surge in construction is adding to supply in housing, "which partly explains the slow growth in rents."

He said price gains for existing homes have "moderated" though there are pockets where prices are "increasingly briskly."

"Credit growth and turnover in the housing market are also lower than they were a year ago. 

"Under APRA's guidance, lending standards have also been tightened. 

"Overall, then, the situation is somewhat more comfortable than it was a year ago, although we continue to watch things carefully."

Jonathan Chancellor

Jonathan Chancellor is one of Australia's most respected property journalists, having been at the top of the game since the early 1980s. Jonathan co-founded the property industry website Property Observer and has written for national and international publications.

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