House­hold debt at record high, Aus­tralians warned

The Sun (Malaysia) - - SUNBIZ -

MEL­BOURNE: House­hold debt in Aus­tralia is at a record high and it is not in the pub­lic in­ter­est to en­cour­age fur­ther bor­row­ing, cen­tral bank Gov­er­nor Philip Lowe said yes­ter­day, in an­other sign that the bank might be done cut­ting in­ter­est rates for now.

The Re­serve Bank of Aus­tralia (RBA) left in­ter­est rates at a record low of 1.5% at its pol­icy meet­ing this month, sound­ing op­ti­mistic about the econ­omy and more con­fi­dent that in­fla­tion would pick up.

“There re­main rea­son­able prospects that in­fla­tion will re­turn to around av­er­age lev­els over the next cou­ple of years,” Lowe said at a business din­ner in Mel­bourne.

Lowe spoke about chal­lenges to the out­look and manag­ing them, while adding that the RBA’s cen­tral sce­nario for the AU$1.6 tril­lion (RM5.2 tril­lion) econ­omy was a “rel­a­tively pos­i­tive one”.

Ris­ing house­hold debt, equiv­a­lent to 185% of an­nual dis­pos­able in­come, needed a close watch.

“It is im­por­tant that we avoid a build-up of fi­nan­cial im­bal­ances in house­hold bal­ance sheets,” Lowe said.

“It is un­likely to be in the pub­lic in­ter­est, given cur­rent pro­jec­tions for the econ­omy, to en­cour­age a no­tice­able rise in house­hold in­debt­ed­ness, even if do­ing so might en­cour­age slightly faster con­sump­tion growth in the short­term.” – Reuters

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