FIIG calls on RBA to cut interest rates
Fixed Income Investment Group Securities (FIIG) has called on the Reserve Bank of Australia (RBA) to cut interest rates by 2 per cent, as low interest rates have not yet encouraged investors to borrow capital to re-invest in the market.
“Record low interest rates are not yet translating into record low borrowing rates and access to credit remains problematic. With debt markets closed to corporate borrowers, the banks are their only avenue for debt capital. The alternatives are asset sales or equity capital raisings, which potentially prolongs the malaise,” FIIG managing director Jim Stening said.
The RBA would need to make a significant adjustment to have a meaningful impact on businesses, Stening said.
The lower cost of borrowing for businesses would put a halt to job losses and cut household debt, and help the banks cope with higher default rates by delivering higher margins.
“Lower interest rates deliver immediate relief to borrowers, mean that significant pressures can be lifted and decisions which deliver fundamental change need not be made in haste,” Stening said.
AUTHOR
Benjamin Levy
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