The Reserve Bank has warned the Australian economy is at risk of becoming trapped in a cycle of low growth, severely limiting – or perhaps even removing – the chance of further interest rate cuts .

In a speech to investors this morning, deputy governor Andrew Hauser said that, in part because the central bank started cutting rates when there was little spare capacity in the economy, and therefore little capacity for rate cuts without spurring on inflation, Australia may "find itself trapped on the economic rail".

That, in turn, could spell the end of any more interest rate cuts this cycle.

"The economy may find itself boxed in by its own capacity constraints, like a racehorse trapped against the course fence, unable to surge forward," he said.

"On that view, there may

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