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Reserve Bank of Australia Governor Philip Lowe said the interest rate is set to follow a steady path and ruled out any reduction as it boost household borrowing.
He noted that lower interest rate would encourage risky lending and threaten financial stability.
"There is a balance to be struck. Too much borrowing today can create problems for tomorrow, because debt does have to be repaid," Lowe told parliamentary committee.
In an opening statement, he reiterated that the Australian economy is set to grow by around 3 percent this year and next.
