RBA likes our new love of savings

Consumers have been saving and not spending in recent years, said the Reserve Bank of Australia (RBA) governor Glenn Stevens.

The higher savings rate is the result of people being more cautious after natural disasters, speculation that interest rates will rise, political arguments in Australia and uncertainty about the global economy, he says.

Mr Stevens also said that the current lower level of spending looked normal with a longer term view, given people had been spending more than they earned in the preceding years.

"A rapidly rising saving rate isn't normal, but nor is a continually falling one," he said. The higher rate of saving would increase investment and help lift productivity.

Source: Herald Sun