Debelle speech signals RBA remains ready to cut rates if needed

Published 26 February 2013 12:01, Updated 26 February 2013 12:03

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Debelle speech signals RBA remains ready to cut rates if needed

“We still obviously retain scope to lower interest rates further, should the need arise,” RBA assistant governor Guy Debelle says. Michel O’Sullivan

Jacob Greber

Reserve Bank of Australia assistant governor Guy Debelle has sent a strong signal that policy makers remain ready to lower interest rates if needed to counter the high dollar.

In a speech in Adelaide, Dr Debelle also warned that low official interest rates could generate excessive credit growth, surging asset prices and other imbalances.

Dr Debelle confirmed that the bank believed it had been able to counter the effects of the high Australian dollar with lower interest rates.

“We still obviously retain scope to lower interest rates further, should the need arise, including to counterbalance the pressures of an elevated exchange rate,” Dr Debelle told an audience of students at the University of Adelaide business school.

The comments follow similar comments from RBA governor Glenn Stevens last week that while the dollar was high, the bank remained unwilling to undertake direct intervention in currency markets to lower its value.

RBA officials have in recent weeks highlighted the challenges of managing interest rates with the currency remaining high, despite last year’s falls in commodity prices.

Read the full version of this story on The Australian Financial Review.

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