31 October 2012 6:43am

The Reserve Bank is "closely monitoring" the impact of recent interest rate reductions, which have encouraged accelerated loan repayment rather than new borrowing.

Reserve Bank deputy governor Philip Lowe said that Australian interest rates were low compared with historical averages, although they were relatively high compared with other countries.

Speaking at the Commonwealth Bank Australasian Fixed Income Conference in Sydney yesterday, Lowe said: "These lower than average interest rates are providing some support to demand in the economy.

"There is also some sign...