RBA’s Lowe sees altered transmission mechanism behind low inflation
Inflation stubbornly low despite best efforts of central banks
Persistently low inflation despite record-breaking stimulus from central banks seems to imply a change in the underlying monetary transmission mechanism, Philip Lowe told the Goldman Sachs Annual Global Macro Economic Conference today.
The Reserve Bank of Australia (RBA) deputy governor argued that debt had a major role to play in the weakness of policy transmission. Both households and governments have been deleveraging, reducing the ability of low rates to bring forward consumption, Lowe said
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