RBA's Stevens: Central bank policies must pass the 'Bunnings test' - AFR

In an interview with the Australian Financial Review (AFR), the Reserve Bank of Australia’s (RBA) outgoing Governor Glen Stevens noted that the extreme monetary stimulus policies adopted by major global central banks have ‘stimulatory effect initially,’ while questioning whether they passed what he called the "Bunnings test".

Key Quotes:

The effect (of the massive bond-buying programs) "probably was stimulatory initially"

"My test is: who went to Bunnings in the end as a result of that? Did someone go and take borrowed money and spend it on real goods and services that wasn't going to otherwise?

"Because that's actually in some sense the ultimate test. Did we create some additional demand?"

"(Its) impossible to know really, but I suppose I'm left with some doubt that all that many people went to Bunnings that weren't otherwise going to".

"I think more of the borrowers are actually using the low rates to accelerate the repayment rather than going to Bunnings."

"So the day when they are freer of the debt, or have a lower debt and they're then more confident to spend – that day is getting closer".