Economy needs Kevin Rudd approach: Professor

IN THE lead-up to Tuesday's Reserve Bank meeting, an economics professor has said a cut in interest rates would not provide the stimulus the Australian economy needs.

Griffith University Business School economics professor Fabrizio Carmignani said a philosophy similar to the one the Kevin Rudd government had in the wake of the global financial crisis would be more effective in generating the fiscal stimulus the economy needed.

"Is there space to cut interest rates on Tuesday? The answer is yes, there is no inflationary pressure," Prof Carmignani said.

"But this kind of monetary policy is not going to have much impact.

"Even if there is a cut in interest rates on Tuesday, it will have very marginal impact on the economy."

He said the government needed to stop being obsessed with debt and balancing the budget and take a more expansionary approach.

He said measures the former Prime Minister Kevin Rudd took in 2008 at the height of the global financial crisis were appropriate.

While the government would not need to spend as much money in 2016, he said the country could revisit the logic and invest more public money into an economy that needed revitalisation.

Topics:  economics professor reserve bank

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