Speaking during a question and answer session in New York on Monday, Reserve Bank of Australia Governor Glenn Stevens told his audience that rate cuts were not "useless," but that their potential had become more limited.
Australia's central bank is willing to cut interest rates again if needed, but is cautious about the likely impact on house prices and debt levels. According to Stevens, "There’s a tendency for people to say, 'well, things are still not quite strong enough, just keep cutting,' and I think you have to ask a few more questions than that and think about the channels through which it will be effective."
The central bank cut interest rates to a record low of 2.25 percent in February, but it surprised many analysts by skipping further moves at its policy meetings in March and April. "The (RBA) Board has clearly signaled a willingness to lower it even further, should that be necessary,” Stevens continued.
Stevens also said he would be "surprised" if the Australian dollar makes a turn around. Stevens said in the prepared remarks that the currency was "very likely" to fall further over time.
"I'd be a bit surprised actually if it doesn’t go down some more," he said. The Australian dollar was last down 0.8 percent at $0.7723.