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Mr Costello compared the ultra-low level of interest rates with emergency medical treatment, which should be withdrawn as a patient recovers.“Imagine the patient is in the hospital and is in great pain, you might be delivering morphine.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 impossible, the lnp keep telling us that they're the best financial managers ever, so it must/will be someone else's fault
clancyyeates Who cares what Costello says?!
clancyyeates Yeah, but He doesn’t know anything
PCKJ3627 clancyyeates WTF would Costello know about the economy?
clancyyeates Most economists have warned against following any of Costello's trickle down economic advice. auspol
clancyyeates The rate was much higher under his stewardship (6.75%) and he said that means the economy is good. The current gov says how good is the economy at 0.10% - Who's lying?
clancyyeates Although he's right about the potential of an asset bubble, Peter seems to be ignoring the fact that it doesn't 'represent' ongoing economic weakness, the economic is literally weak. What his comments represent is typical LNP policy of ignoring something & hoping it goes away.
clancyyeates The bloke who blew a mining boom and swapped our gold reserves for a second hand Cortina and a Mars bar doesn’t get a say in our economy.
clancyyeates I called my bank for a better rate and my mortgage interest went down $200 a month. That $200 is now circulating in the economy, instead of going to a banks shareholders. TELL ME HOW THIS IS BAD FOR THE ECONOMY?!
clancyyeates I don't pay any attention to what Mr Smirker says. The guy's a dick (not sure if he was a Big Swinging Dick though). Costello and Little Johnny squandered the mining boom billions on middle class welfare and buying retirees' votes.
clancyyeates Punishment for your silliness is lines - 'wages growth will have to be materially higher', write it 500 times Peter. Ultra-low rates are a symptom of the cause, trash LNP economic policy. The coalition ARE the 'exit strategy', if only they can just exit already!
clancyyeates Peter Costello, by bullying Google and Facebook into paying extortion racket fees to MSM corporations such as yours, you don't know how the free market works.
clancyyeates But, Timmy said we should all buy houses