RBA nails record low interest rates to the floor

The Reserve Bank has slashed the official cash rate to its lowest ever level, cutting from 0.25 per cent to 0.1 per cent, and promises to keep rates nailed to the floor for the next three years.

The Central Bank will also embark on a $100 billion bond-buying program as it seeks to pump cheap capital into the economy to encourage lower bank lending and create jobs.

Leading economist Professor Warren Hogan tells Brooke Corte he’s not convinced the Reserve Bank’s actions will change the course of Australia’s economic recovery all that much.

“What is going to get in the way of businesses investing and hiring is not access to credit and debt, the banks are flush with money, there’s lots of savings going on and interest rates are already really low,” Professor Hogan said.

“Businesses need a reason to invest, they need a long term view of the economy recovering, and the thing that worries me is that the RBA Governor is clearly worried about the economy by doing this unprecedented policy action,”

Click play to hear the full interview: