Investing.com - Reserve Bank of Australia Governor Glenn Stevens hinted on Wednesdsay that continuously lower interest rates may not be the right formula for econmic growth in a veiled reference to a lack of fiscal stimulus as he prepares to exit his post next month.
Stevens, in an apparent swan song of sorts, made the remarks as his deputy Philip Lowe will succeed him in September and gave a macro picture of the history of Australia that noted that while gross public debt across government levels accounts for about 40% of GDP gross household debt is three times larger at about 125% of GDP.
"That is not unmanageable, but nor is it a low number. It's an interesting question which sector would have the greater capacity to take on more debt, in the event that we were to need a big demand stimulus," he said.
"The point I am trying to inject here is simply that popular debate in Australia about government debt and how we limit or reduce it seems so often to be conducted while largely ignoring the size of private debt," Stevens said. But he offered no further insights on whether his last RBA meeting will move from a record low 1.50% set at the Aug. 2 meeting.