Future Fund chairman Peter Costello has warned ultra-low interest rates risk creating the next financial crisis if central banks keep borrowing costs at record lows for longer than necessary., but Mr Costello on Tuesday said he hoped this would not be the case, because it would represent ongoing economic weakness.
“I understand what’s going on, that we’re trying to reassure everybody that monetary policy and fiscal policy will be supportive for as long as it is needed. But I think the critical thing at the moment for central banks and governments is to think of the exit strategy,” he said at the AFR Business Summit in Sydney.
Mr Costello compared the ultra-low level of interest rates with emergency medical treatment, which should be withdrawn as a patient recovers.“Imagine the patient is in the hospital and is in great pain, you might be delivering morphine. But it doesn’t mean the patient should be on morphine once they recover.”The RBA kept rates on hold at last week’s March meeting, with Dr Lowe saying there were few signs of an inflation rise in Australia that would require higher interest rates.
Source: Loan Digest (loandigest.net)
clancyyeates Costello is right. Market wants rates to rise. Our RBA wants them low...
clancyyeates Well it's do as I say, but not as I once did. RBA Gov Macfarlane delivered very low interest rates for years after the dot com/tech crash in 2001. CGT & NG changes + mining boom to China - were mainly responsible for todays housing affordability problem.
clancyyeates Get old mate Pete to watch MrKRudd 's Press Club speech - he might learn something about fake economic theories
clancyyeates bigswingingdicks Is Morrison a small member of this Liberal group
clancyyeates funny given he's been in josh's ear about RBA's QE policy now in place.
clancyyeates Isn’t Costello also chairman of the Age and SMH Maybe you should have mentioned that as well Another failed Federal Treasurer
clancyyeates What a hypocrite is our [Lou] Costello. And he does it so effortlessly!!
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