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Vital Signs: Any talk about raising interest rates is a huge mistake

By Richard Holden, Professor of Economics, UNSW
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It seems it doesn’t take much of an economic recovery before people start pressuring policymakers to pull back the very policies that have contributed to the recovery.

The Reserve Bank of Australia wisely (if rather too late) cut short-term interest rates to 0.1% – effectively zero – in November. It also lowered longer-term rates through a bond-buying program (i.e. quantitative easing). Given the economic outlook, said the bank’s governor, Philip Lowe, it did not expect to increase the cash rate for…


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