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Glenn Stevens on the economy « Previous | |Next »
February 20, 2010

In his Opening Statement to House of Representatives Standing Committee on Economics Glenn Stevens, the RBA Governor says that:

the historic shift in the centre of economic gravity to the Asian region is continuing, and if anything it has been highlighted by the different performances during the crisis and initial recovery. The differences in speed of recovery between the emerging world and the advanced world, and the likely persistent differences in growth trajectories into the future, will increase the pressure on exchange rate arrangements in the region. Australia is relatively well-placed. We are located in the part of the world that is seeing the most growth. And in terms of fiscal sustainability, Australia’s position is, by any measure, very strong indeed.

He adds that the overall size of the downturn in economic activity was considerably smaller than thought likely a year ago. Consequently, there is less scope for robust demand growth without inflation starting to rise again down the track:
Monetary policy must therefore be careful not to overstay a very expansionary setting...If economic conditions evolve roughly as we expect, further adjustments to monetary policy will probably be needed over time to ensure that inflation remains consistent with the target over the medium term. This is a normal experience in an economic expansion: as economic activity normalises interest rates do the same

Michael Stutchbury uses this to reiterate his well known economic policy theme---budget surpluses, paying off debt and retreating from Labor's re-regulation of the job market.

| Posted by Gary Sauer-Thompson at 7:49 AM | | Comments (1)


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