The RBA was awfully slow on the uptake regarding macroprudential as MB campaigned for from 2012. Glenn Stevens wasted hours, days, months and years letting the bubble run wild while he dithered.
Not so Phil Lowe. From the BIS’ Committee on the Global Financial System chaired by Aussie bank governor:
The decade following the Great Financial Crisis (GFC) has been marked by historically low interest rates. Yields have begun to recover in some economies, but they are expected to rise only slowly and to stabilise at lower levels than before, weighed down by a combination of cyclical factors (eg lower inflation) and structural factors (eg productivity, demographics). Moreover, observers put some weight on the risk that interest rates may remain at (or fall back to) very low levels, a so-called “low-forlong” scenario. An environment characterised by “low-for-long” interest rates may dampen the profitability and strength of financial firms and thus become a source of vulnerability for the financial system. In addition, low rates could change firms’ incentives to take risks, which could engender additional financial sector vulnerabilities.
