Rate cuts are not enough to boost economic growth

MALAYSIA - The central bank on May 7 became the first in Southeast Asia to cut its key interest rate this year, by 25 basis points to 3.0%, moving to support its economy at a time of concern about global growth.

With slowing world growth and an unstable trade and political environment, interest rate cuts are not enough to bolster economic growth.

In fact, over-reliance on rate cuts can be dangerous; the trend towards lower peak and trough rates in every rate cycle may lead to, among others, asset bubbles, debt pile-up and pension crises.