(RTTNews) - Australia’s economy is on the road to recovery after emerging from one of the mildest downturns on record, Reserve Bank of Australia Governor Glenn Stevens said on Thursday. However, he said there is a need to guard a new economic expansion.

“Recessions will occur, as they always have,” Stevens said in a speech at Melbourne. “Financial behavior matters greatly and can, if we are not careful, contribute to instability,” he warned.

The RBA chief said to make the current upswing in the economy long and stable, and relatively free of serious imbalance, there is a need to re-invest in the same policy discipline, and the same careful private-sector management, that paid dividends in the recent episode. “That means keeping tested frameworks in place, amended as necessary in the light of experience. It means unwinding temporary measures as appropriate. It means keeping a focus on flexibility.”

Moreover, he said after a big recession, it usually takes some years for well-above-trend growth in demand to use up the spare capacity created by the recession. Stevens said Australia start upswing with less spare capacity than some previous ones.

Tuesday, Stevens became the first G20 central bank chief to raise key interest rate twice after the global economic crisis.

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

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