If RBA interest rates hit zero…
Posted by Dave Bath on 2009-02-12
So, …, in order to make it easier for people and companies to borrow money to keep the economy running, the Reserve Bank keeps on lowering interest rates. Those rates can’t get much lower before the RBA starts paying people to borrow money.
What can the RBA do in such a situation?
The government needs to start talking to us NOW about the options it is considering when the RBA cannot lower rates any more.
Of course, if rates hit zero or close to it, what is the ratio between what banks charge and what they can get it for from the Reserve?