Reserve Bank Assistant Governor Christopher Kent said an aging population will let Australians work later in life and defended record-low interest rates, saying they stimulate the economy even as savers’ returns fall.
Low rates “temporarily raise the disposable incomes of those with debt, but lower incomes for those reliant on interest-bearing assets,” Kent said in the text of a speech in Adelaide today, adding inflation was projected to remain inside target over the medium term. “This is stimulatory nonetheless, in part because the household sector is a net debtor overall.”
In a speech focused on the implications of an aging population in Australia, Kent said that while its drag on the economy was well known, there were benefits that hadn’t been explored. He cited people’s ability to work later in life while still enjoying longer retirement, and their ability to take on risk at an older age, knowing they could make up for any failure with a longer stretch in the workforce.
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