SYDNEY (Reuters) – Heightened tensions between the United States and China represent the biggest risk to global economic stability, Reserve Bank of Australia (RBA) Governor Philip Lowe said in a private meeting late on Tuesday.
Lowe said the U.S.-China trade war was hurting global investment, wages and economic growth, the Sydney Morning Herald (SMH) reported, citing sources who attended the business event.
“I do not have a clear idea of what strategy the U.S. has. [Some people in the US] say that it is time for Team West to muscle up against China and that is very worrying,” Lowe told business leaders, according to the paper.
The remarks came as U.S. President Donald Trump ratcheted up tensions with China, saying the Asian giant had to be taken on even if it caused short-term harm to his country’s economy.
The RBA did not immediately respond to Reuters’ request for a comment.
The RBA, which has slashed interest rates by 50 basis points since June to an all-time low of 1%, has recently sounded alarm bells on growing uncertainties from the ongoing trade war.
Minutes of its August policy meeting released on Tuesday showed the board discussed unconventional monetary policies, including negative interest rates, as it left the door ajar for further easing.
“Uncertainty around trade policy had already had a negative effect on investment in many economies,” the minutes showed.
Board “members observed that the escalation of the trade and technology disputes had increased the downside risks to the global growth outlook, although the central forecast was still for reasonable growth.”
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