RBA Governor Philip Lowe said in a speech that negative interest rates in Australia are “extraordinarily unlikely”. He added that Australia is “not in the same situation” as faced in Europe and Japan, with stronger growth prospects, better banking system, demographic profile, without deflation. Also, internationally, it’s not clear that negative interest rates has been a success.
Also, the threshold for undertaking QE “has not been reached” and he didn’t expect it to be reached in the near future. He also didn’t expect the country to reach the point where “QE could help promote our collective welfare”. QE would become an option to when cash rate hits 0.25%, “but not before that”.
Lowe also said “the Board continues to discuss what role it can play in ensuring that this progress takes place and how it might be accelerated. It recognizes the benefits that would come from faster progress, but it also recognizes the limitations of monetary policy and the importance of keeping a medium-term perspective squarely focused on maximizing the economic welfare of the people of Australia.”
