Australia’s Treasurer Frydenberg warns global stimulus threatens financial stability – FT

In an interview with the Financial Times (FT) on Wednesday, Australian Treasurer Josh Frydenberg touched upon a number of topics, including the implications of the global stimulus, employment, monetary policy and Australia-Sino ties.

Key quotes

“Unprecedented global stimulus efforts during the coronavirus pandemic are creating financial stability risks that will only intensify when interest rates inevitably rise.”

“There are no doubt elevated debt levels will create challenges for many countries. While global interest rates are low those debt levels can be serviceable — but there will be a time when the monetary policy settings change,”

Asked if he thought the economic policies of Thatcher and Reagan were still relevant, he said: “[Reagan and Thatcher] achieved a lot when they were in office and they were committed to lower taxes. They were committed to cutting regulation and that’s certainly what I’ve been committed to as well.”

When asked about Beijing’s imposition of trade sanctions on a range of Australia’s exports, he said, “obviously we have had some challenges with China.”

“Australian ministers were prepared to sit down with their Chinese counterparts to discuss the bilateral relationship but only on a “no conditions attached” basis. It is a mutually beneficial trading relationship — we supply the bulk of their iron ore and that iron ore has helped underpin their economic growth,” he added.

Market reaction

AUD/USD ignores the remarks, as it posts mild gains above 0.7800, extending the previous recovery rally.  The spot was last seen trading at 0.7833, up 0.20% on the day.