The man who is set to manage Australia’s economy if the government changes pledged on Monday to deliver annual surplus budgets and to look to the central bank to cut interest rates before considering stimulus spending in a future downturn.
In an interview with Reuters, the opposition treasury spokesman Joe Hockey said he remained committed to an independent Reserve bank of Australia, and would not change its mandate to target inflation at between 2 and 3 per cent when it considers official interest rate moves.
Australian interest rates are currently at 4.25 per cent, well above much of Europe, the United States and Japan, where rates are between zero and 1 per cent.
“We have amongst the highest central bank interest rates in the world,” Hockey, 46, said, adding rate cuts were an effective way to stimulate the economy due to the number of Australians with mortgages.
“It is the first and best lever,” he said.
The level of interest rates is an extremely sensitive political issue in Australia. About one in three Australian householders are buying their home, while another third own their home and one third rent.