Reserve Bank of Australia Governor Glenn Stevens on Friday said the interest rate cuts were not intended either to engineer a return to a housing price boom, or to overturn the current prudent household habits.
Investors returns from deposits remain above inflation and it has very low risk, he told an American Chamber of Commerce lunch. The central bank this month lowered its key rate by 25 basis points.
Further, he said the industry and geographical shifts in the drivers of growth cannot be much affected by monetary policy.
He observed that the nature of public discussion is unrelentingly gloomy, and this has intensified over the past six months.
Australia's economy expanded 4.3 percent in the first quarter from a year ago. "It is also to be hoped that some of the recent positive data outcomes will give pause to reflect that, actually, things have so far turned out not too badly," said Stevens.
Australia had a multi-speed economy. Nonetheless, the respective shares of mining and manufacturing in Australia's GDP at present are about where they were in 1900, he added.
by RTT Staff Writer
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