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RBA's Stevens suggests fiscal spending required to spur economy

On Wednesday, Glenn Stevens Reserve Bank of Australia Governor dropped a hint that continuously low interest rates might not be the right solution for the national economy, especially considering a lack of fiscal stimulus. Furthermore, he’s about to leave his post next month.     

Stevens’ deputy Philip Lowe will most likely succeed him in September. Stevens also provided a macro picture of the history of Australia, which noted that while gross public debt across government levels accounts for approximately 40% of GDP, gross household debt has appeared to be three times larger at approximately 125% of GDP.

It’s not unmanageable, though it’s not a low number too. That’s an intriguing question which sector would boast the greater capacity to take on more debt, in case of the need for a greater demand.

The popular debate in Australia regarding government debt and how it should be reduced seems often to be conducted while mostly ignoring the size of private debt, Stevens stressed.  

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