The RBA took official interest rates to a record low of 0.25 per cent in March. At the same time,it started buying government bonds to bring down interest rates on public debt while offering cheap credit to commercial banks.
Up to $200 billion is on offer to the commercial lending sector while the RBA has spent close to $60 billion on government bonds.
Dr Debelle,who warned the economy faced a gradual and uneven recovery from the recession,told an Australian Industry Group virtual conference the bank could seek to lower the structure of a range of interest rates across the economy without taking the cost of money negative.
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This would also put downward pressure on the Australian dollar which,if it fell,would help the overall economy by making exports more competitive while also giving a financial advantage to domestic producers against imported goods and services.
Such low rates would also reduce the interest bill for borrowers,including governments,with Dr Debelle giving the green light to the federal and state governments touse their upcoming budgets to sink more money into infrastructure projects.
"There is not,in my judgement,a trade-off between debt and supporting the Australian economy in the current circumstance. Absent the fiscal stimulus,the economy would be significantly weaker and debt levels even higher,"he said.