RBA’s Stevens Says Room to Cut Rates Further if Needed

(CEP News) - The Reserve Bank of Australia still has more rate ammunition to stimulate the economy if needed, Governor Glenn Stevens said on Thursday.

Delivering his semi-annual testimony before the House of Representatives Standing Committee on Economics, Stevens said the present expectations are not for rates to reach zero. He also said there will probably be a point where easing won’t be as effective.

He pointed to the U.S., where he said Federal Reserve rate cuts haven’t helped home borrowers.

He credited the extraordinary actions taken by world central banks to supply liquidity for likely avoiding a “catastrophic loss of confidence on the global financial system. He said that work remains a work in progress.

Commenting on the Australian government’s AU$42 billion stimulus bill approved on Feb. 2, Stevens said he is comfortable with the size and speed of the package. He also said Australia is fortunate in that its policy measures are working much more effectively compared to many other countries.

The governor remained rather optimistic, saying there’s no reason to believe this downturn will be a deep one. He also said very large easing is in place, with the full effects yet to be seen.

By Stephen Huebl, shuebl@economicnews.ca

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Posted in Categories: Australia, Economy, Eurozone, Releases, USA.

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