Rates are dangerously low says RBA

The Reserve Bank governor, Glenn Stevens, told the Senate economics committee in Sydney yesterday that interest rates were now at unusually low levels to fight the economic slump.

Mr Stevens said it would be dangerous to leave them there as the economy recovered.

The RBA will revise its economic forecasts again later this month and is expected to lift the outlook for economy, putting additional pressure on rates.

Mr Stevens conceded that the government’s economic stimulus may put pressure on interest rates because it raised total demand in the economy.

Cutting the stimulus would tend to hold down interest rates, he said, but only because it would cut future growth.

Source: The Age