Yahoo Finance 
The RBA has just revealed what it needs to unleash quantitative easing and negative interest rates in Australia for the first time
Australia could face unprecedented measures like negative interest rates and quantitative easing (QE) in a desperate attempt to kickstart the economy, after the Reserve Bank governor Philip Lowe endorsed both in a new report on Tuesday.
Prepared for an international committee Lowe chairs, he acknowledged the net positives of the unconventional tools and indicated they could help to stimulate an economy like Australia's.
If it were to do so, however, Lowe indicated that it would need the full support of a federal government willing to spend for it to work.
While the government has previously refused to do so, further deterioration could force its hand if the RBA runs out of options.
Things look destined to get weird in Australia as the Reserve Bank (RBA) begins anxiously considering the unorthodox tools it has at its disposal.
In his strongest indication yet that he will do whatever it takes to get Australia's economy growing again, RBA governor Philip Lowe published a report on Tuesday outlining the effects of the unconventional such as negative interest rates – just days after he slashed the cash rate for the third time this year.
"The Great Financial Crisis and its aftermath presented central banks with unprecedented challenges. Policymakers’ response included the introduction of new tools. Central banks implemented different combinations of what have been labelled unconventional monetary policy tools (UMPTs)," Lowe wrote in the report, prepared by the BIS Committee on the Global Financial System, of which Lowe is chair.
Those tools include negative interest rates and quantitative easing (QE) – so unconventional that neither of which has ever been tried in Australia. Despite that, the report concluded that both tools have had net positive effects overseas.
"I hope that this important report can serve as a resource for policymakers looking to learn from the experience of the past years as they consider ways to maintain and enhance the efficacy of monetary policy in the future," Lowe wrote.
READ MORE: Quantitative easing – also known as printing money – is an economic solution for uncertain times
However, while Tuesday's report indicates he is wholly considering their use, he did suggest one substantial requirement.
"One key lesson is that the tools are most effective when used together with a broader set of policies, like fiscal and prudential measures," Lowe said.
In other words, Lowe would want the government to splash some cash around, as well as the support of regulators in doing so.
It's not the first time he's called on the Federal Government, urging them to spend more at a Parliamentary Committee. While he's struggled to get them to budge, further deterioration in the economy and an RBA keen to move could be enough to force its hand.
While Lowe has previously raised the possibility of both being implemented here, he's been keeping his cards close to his chest.
"We are prepared to do unconventional things if the circumstances warranted it,” he told the Australian government in August. “I hope we can avoid that.”
It looks increasingly unlikely however that he will have a choice. The official cash rate looks destined to be cut again to 0.5% by early next year, and short of a miraculous rebound in economic activity, the RBA will desperately need to consider its options.
The weird ones included.
READ MORE: This is what a 0% interest rate would mean for Australia
