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Australia’s central bank warns of danger in high household debt

by Jonathan Adams

The head of Australia’s central bank gave the clearest signal yet on Wednesday that further cuts in interest rates would not be in the national interest as the danger of a debt-fuelled boom and bust was just too severe.

The Reserve Bank of Australia (RBA) has kept interest rates at a record low 1.50 per cent since last easing in August, and Governor Philip Lowe hopes the current setting will be enough to deliver balanced economic growth.

“We set out to choose the path that, in our judgement, best promotes the welfare of the Australian people,” he said in a speech in Sydney, leaving little doubt that encouraging yet more borrowing would not meet that standard.

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