A senior central banker has suggested interest rates could be cut again.
The Reserve Bank of Australia (RBA) cut the cash rate to a record low of 2.25 per cent in February.
But assistant governor Christopher Kent has hinted the RBA board could further ease monetary policy.
“That’s the case they’re going to be considering at forthcoming meetings,” he told the National RSL Clubs Conference in Hobart.
“It’s a good question.”
Kent also acknowledged that consumer sentiment was weak, a day after a weekly ANZ-Roy Morgan reading showed that confidence levels were at a three-month low despite a recent interest rate cut.
“Part of it may be the gradual rise in the unemployment rate; part of it, I suspect, may just be the low growth of labour incomes because of the wages side,” he said.
“Unfortunately, we have an interest rate lever, we don’t have a confidence lever.
“We do what we can by having interest rates low and doing so in a carefully considered way.”
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But Kent predicted that over time consumer confidence would build, from its below-average levels, because the Australian economy had good, longer-term prospects.
“It tends to build slowly and gradually; it tends to be lost quickly,” he said.
The RBA left rates on hold in March but governor Glenn Stevens said further easing “may be appropriate over the period ahead, in order to foster sustainable growth in demand”.
