Former RBA head: Too much faith in interest rate cuts - Australian Associated Press
|Ian Macfarlane, who headed the Reserve Bank of Australia (RBA) through the Asian Financial Crisis of the late 1990s and the Dot.Com crash of the early 2000s, believes the present situation is "most perplexing" and the central bank is placing too much faith in expectations that interest rate cuts can stimulate the economy.
"Too much faith is being placed in the expectation that monetary policy can do things that it can't do," Mr. Macfarlane told The Weekend Australian newspaper on Saturday.
"It's done everything it can do. Once interest rates are negligible, further cuts would seem to have very little power to do anything useful."
The RBA has delivered three 25 basis point rate cuts this year and is widely expected to do more in the near future.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.