Reserve Bank Governor Glenn Stevens says Australia is better placed than other countries to fight off an economic shock, despite record low interest rates and higher government debt. Stevens says Australia still has room to ease both monetary and fiscal policy.

 

His remarks indicate a willingness to take the bank’s cash rate below its present 2% and allow the government to run up more debt, should it be needed to ward off recession.

 

Treasury Secretary John Fraser suggested that policies employed by central banks elsewhere, such as negative interest rates and quantitative easing, had reached the limits of their effectiveness.

 

“We have been in this experimental stage with monetary policy for more than seven years now,” Fraser said.