Bank chairman David Gonski has said interest rates are only one factor in the economy's performance as he urges the Reserve Bank not to cut rates next month.
Speaking at a business lunch in Sydney yesterday, Gonski said that lower oil prices and the falling dollar were already adding stimulus to the economy.
Rates are at a current record low of 2.25% and Gonski hopes the RBA
will "think twice" before cutting rates again, The Australian reports.
“Oil prices are low, interest rates are historically low and the dollar seems to be moving lower anyway,” he said.
“Those are quite conducive to business activity so … I’m not convinced that one should drop interest rates.”
Former Howard government minister and assistant treasurer, Helen Coonan also urged caution, The Australian
reported, saying the last RBA
rate cut in February to 2.25% “hasn’t really done very much” to restore confidence.
AMP chairman Simon Mckeon also told the lunch that the
big issue was businesses holding back, and not because “the cost of money is high, because it’s not”, but due to the uncertainty on the future landscape and opportunities.
“I think business is quite timid actually making those decisions … for the longer term,” he said.
“I’m not sure what’s actually required, obviously not just further lowering of interest rates. I agree with Helen that it’s not had a huge impact in recent times.”