Reserve Bank of Australia Governor Glenn Stevens said Friday that the current setting of the monetary policy is "about right for the moment," given near trend growth and subdued inflation.
In his opening statement to House of Representatives Standing Committee on Economics today, Stevens said, "With growth near trend, inflation consistent with the target, interest rates about average and an outlook suggesting more of the same, the setting of policy was about right for the moment."
"We do not, at this point, see the signs of the rapid collapse in global demand we saw three years ago," he said.
At the February monetary policy meeting, the RBA left its benchmark cash rate unchanged at 4.25 percent. That followed two consecutive rate cuts towards the end of 2011 to support the economy amid global slowdown.
The minutes of the latest meeting revealed that the policymakers considered further easing was possible if domestic demand weakens.
Stevens said that the Bank's central expectation is for growth to be close to trend, and inflation close to the target, over the coming one to two years.
Earlier this month, the RBA trimmed its growth forecast for the year ending June 2012 to 3 percent from its previous prediction of 4 percent.
Referring to developments in Europe, Stevens said that the actions of the European Central Bank contributed greatly to the stabilization of financing conditions, essentially by removing questions over the funding of European banks.
Stevens noted that a great deal more needs to be done to place European banks and sovereigns onto a stable footing, and to boost potential growth in Europe.
by RTT Staff Writer
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