Cutting interest rates to marginally boost employment is not worth the risk of encouraging more household debt, the head of the Reserve Bank says.
Governor Philip Lowe has told a parliamentary economics committee debt is already rising much faster than household income.
A further rate cut would likely push household debt higher to fund home purchases and investment.
"Is it really in the national interest to create a little bit more employment growth in the short-run at the expense of creating vulnerabilities that could be quite dangerous in the long term," Dr Lowe told the hearing in Sydney on Friday.
"I accept that different people will come to different points on judging that trade-off, but at the moment we're in a reasonable place."
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