12 Aug 2015
RBA concerned by rising household debt – RBA’s Lowe
FXStreet (Mumbai) - Speaking at an economic function in Perth, Reserve Bank of Australia (RBA) Deputy Governor Philip Lowe noted that RBA is uncomfortable with the rising household debt and also hinted that further rate cuts are unlikely as the central bank does not want a spending boom fuelled by debt.
Key Quotes:
“I think it is difficult to escape the conclusion that household balance sheets are, on average, a little more risky than they once were,"
"Given the position of household balance sheets, it is unlikely to be in our long-term interest for a consumption boom to be financed by a pickup in household borrowing."
Spending on infrastructure, including transport, also needs to rise. And if “done properly, it could help lift the return to other forms of investment in a wide range of industries across the economy."
He added low interest rates were helping the economy through a period of transition but Australia needed to start seeing more investment in new assets that were crucial to the "sustainable expansion" of the economy.
Key Quotes:
“I think it is difficult to escape the conclusion that household balance sheets are, on average, a little more risky than they once were,"
"Given the position of household balance sheets, it is unlikely to be in our long-term interest for a consumption boom to be financed by a pickup in household borrowing."
Spending on infrastructure, including transport, also needs to rise. And if “done properly, it could help lift the return to other forms of investment in a wide range of industries across the economy."
He added low interest rates were helping the economy through a period of transition but Australia needed to start seeing more investment in new assets that were crucial to the "sustainable expansion" of the economy.