Barclay’s chief economist for Australia, Kieran Davies, has argued that uncertainty about consumer spending and inflexible expectations of investment returns has made Australian companies less inclined to invest in response to reductions in interest rates. From The AFR:
…the abundance of cash on companies’ balance sheets and high hurdle rates – the range at which an investment’s return justifies the outlay – means non-mining business has been slow to pick up the slack left by the the sharp decline in resource-related capital expenditure over the past two years…
