Low rates may trigger shock

Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 3 : 6-Jul-18

Keeping official interest rates low for too long could have dire consequences, according to the Bank for International Settlements’ Committee on the Global Financial System. The committee warns that it could lead to a rise in inflation, which in turn would force central banks to hike up interest rates, resulting in a global recession. Under one scenario put forward by the committee, inflation could rise by two per cent, forcing central banks to lift short-term interest rates by 300 basis points. In Australia, this would result in economic growth falling to 0.5 per cent.


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