The Reserve Bank of Australia (RBA) has released new research showing Australian businesses told the central bank that low interest rates
alone do not boost investments in the country.
The research also stated that businesses in the country tend to invest using their “gut feeling”.
The finding is in contrast to the common belief that businesses gauge their decisions greatly by the rate of return on investment or the payback period.
The central bank’s research came in shortly after RBA governor Glenn Stevens said monetary policy's ability to spur additional economic growth had waned, while risks had grown considering interest rates were at record-low levels.
The RBA's economic analysts said "many contacts have reported that low interest rates do not directly encourage investment".
They also said it appears to be in contrast to mainstream economic theory, adding that the capital expenditure decisions of many Australian firms "are not directly sensitive to changes in interest rates".
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