Australia's top central banker has taken the unprecedented step of being interviewed on commercial television, warning property buyers not to borrow too much.
Some analysts have interpreted the unusual appearance as indicating that the Reserve Bank of Australia (RBA) is concerned that Australia's property market may become overheated.
In a pre-recorded interview with Channel Seven's Sunrise program, RBA governor Glenn Stevens reaffirmed that interest rates were on the way up, countering a belief held by some that rates
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would remain low after the global financial crisis.
In the first of a series of excerpts from the interview, being broadcast on Sunrise this week, Mr Stevens cautioned against property investment as a "riskless" path to riches.
"I think it is a mistake to assume that a riskless, easy, guaranteed way to prosperity is to be leveraged up into property," he said.
"It isn't going to be that easy."
Rates must move gradually: RBA
Mr Stevens again stressed the central bank's message that interest rates must move gradually towards more normal levels, indicating that the normal cash rate of about five per cent was
based on the average for the cash rate since the early 1990s.
"We cut interest rates to what we called emergency settings when we had an emergency, when we thought we really were going to face a big downturn and we wanted to try and get ahead of that," he said.
As the economy strengthened, interest rates were unlikely to stay low.
"Once the emergency's passed and things gradually look more normal, then it's not wise to leave interest rates down at rock bottom any longer than you need," Mr Stevens said.
"And you shouldn't assume they'll stay that low because that assumption will prove to be unfortunate."
Asked whether he was preparing the public for further interest rate rises, Mr Stevens replied: "I think it would be not doing people any favours to have a prolonged period of very low rates and then hammer them unexpectedly.
"And of course the banks that are lending the money should be, and I'm sure are, testing the potential borrower: can you handle some rise in interest rates?"
Governor concerned: Analysts
JP Morgan interest rate strategist Sally Auld said the governor's television appearance signalled his concern with the booming residential property sector.
"I think it's quite an extraordinary event to have the governor talking to Mel and Kochie," Ms Auld told AAP.
"It shows how worried they are about the housing market."
CommSec chief economist Craig James said it was the "first time" the governor had spoken in a television interview.
The RBA governor's public utterances usually are confined to setpiece speeches and regular appearances before federal parliamentary committees.
Mr James noted that Mr Stevens also confirmed the RBA's inflation target range of two to three per cent, indicating that once the target band was lifted, it became more difficult to
control inflationary expectations.
Mr Stevens also said that, in the current economic environment, it was important to watch what borrowers were actually paying for loans, so there was more attention on variable mortgage rates.
