Business
What’s gone wrong with our interest rate policy – The Australian Financial Review
The RBA has been forced to move in lockstep with a misguided US Federal Reserve that’s held hostage by volatile financial markets.
If there was a conundrum in global saving/investment, it was the lack of response of investment to the dramatic fall in funding costs. With borrowing costs low and business profits high, what had happened to entrepreneurial mojo?
Perhaps this shouldnt be too surprising. Decades of searching for a clear econometric relationship between interest rates and investment has not produced convincing evidence of a linkage. Other factors are more important, such as strong demand. Easy money is an enabler…
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