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After two cash rate cuts down to 0.25% in March, the Reserve Bank of Australia (RBA) has previously said there is no appetite for further reductions.
While Mr Debelle said the effects of negative interest rates were "mixed", he did not rule them out.
"In the short-term, they can contribute to a lower exchange rate," he said.
"In the medium term, the effectiveness can wane including through the effect on the financial system.
"Negative rates can also encourage more saving as households look to preserve the value of their saving, particularly in an environment where they are already inclined to save rather than spend."
Already, the traded cash rate effectively sits at 0.13% due to the Reserve Bank's Term Funding Facility and monetary easing policies.
Earlier in the month, data showed the savings rate skyrocketed, off the back of JobKeeper and increased JobSeeker, to its highest level since 1974.
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Today Mr Debelle also hinted at other levers the RBA can pull to stimulate the economy despite sluggish inflation, wage growth and employment levels.
Mr Debelle said one option is to intervene in the foreign exchange rate, to deliberately lower the exchange rate and make exports more attractive, as the AUD to USD soars past $0.70
"However, with the Australian dollar broadly aligned with its fundamentals, it is not clear this would be effective in the current circumstances," he said.
"That said, a lower exchange rate would definitely be beneficial for the Australian economy, so we are continuing to watch developments in the foreign exchange market carefully."
The Reserve Bank places 'fundamental value' of the Australian Dollar in the 60 US cents range.
One for those who think iron ore is still in the driving seat when it comes to the $AUD #ausbiz pic.twitter.com/uxLpKX81FR
— David Scutt (@Scutty) September 23, 2020
The effectiveness of JobKeeper and increased JobSeeker
Mr Debelle highlighted the effectiveness of JobKeeper and the increased JobSeeker rate, as well as rent deferrals and early super withdrawals.
"While GDP and employment recorded very large declines, household income actually rose," he said.
"This is quite a remarkable and highly unusual outcome. Normally in recessions, household income falls along with the decline in output and employment."
In August, AMP found that the levels of government assistance actually boosted household incomes by about $5,000 in the June quarter despite higher unemployment.
However, Mr Debelle said the assistance was not "overdone".
"The fact that household income rose in the quarter does not mean that the stimulus was overdone," he said.
"Absent the stimulus, the decline in GDP and employment would have been significantly larger and there would have been much greater financial hardship."
This corroborates Australian Council of Social Service (ACOSS) research that found the number of people in poverty declined 13%, and without such assistance, the poverty rate would have doubled.
JobKeeper and JobSeeker are due to be scaled back at the end of this week.
The Victorian handbrake on the economy
The RBA's deputy governor said a few major economic health indicators are being dragged down by Victoria's heightened coronavirus numbers and associated lockdown.
"Hours worked declined by 10% from peak to a trough around early May," Mr Debelle said.
"Since then they have grown by around 6% nationally, though that is being held back by the impact of the lockdown in Victoria.
"We estimate that the lockdown in Victoria has subtracted around 2% from national GDP in the September quarter.
"The virus is having its effect, particularly because of the lockdown in Victoria, but so too is the shortfall in demand that occurs in recessionary conditions.
"That shortfall in demand will be a significant brake on the recovery. Until households and businesses are confident about future demand and income, they will be reluctant to spend and invest."
Westpac's consumer confidence index bounced back in September, surging 18% on August's index, as the Australian Retailers Association said we need to spend our way out of the recession, with retail trade volatile throughout the pandemic.
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