Federal Treasurer Scott Morrison's caution over the effectiveness of further interest rate cuts is "perfectly balanced and reasonable", the Reserve Bank of Australia says.
After the International Monetary Fund and G20 meetings in Washington earlier in October, Mr Morrison said that although the RBA had room to move, even with a record low 1.5 per cent interest rate, monetary policy may have exhausted its effectiveness.
Dr Lowe said he had no issue with those comments.
"My interpretation of what he was saying, what he would have been hearing in Washington, is there are other choices and at some point the second and third options I mentioned - improving the business investment climate and infrastructure spending - become more attractive options than further monetary stimulus," Dr Lowe said at the Citi Annual Australia and New Zealand Investment Conference in Sydney on Tuesday.
"So, I didn't find his comments complicating for me. I thought they were perfectly balanced and reasonable."
The central bank chief also said his biggest concern about the global economy was not low inflation, but the impact on growth and living standards from the increasing shift towards economic protectionism by governments around the world.
He said he suspected the world has passed the "high water for support of open markets", which had greatly benefited the Australian economy.
"If we're inching away from that, I think that's problematic for us all. The biggest problem to arise from that, isn't that inflation is going to be too low, it's that growth is going to be too low," Dr Lowe said.
"That's the bigger risk, not that inflation might be too low, and the central bank can't do anything about this at all."
