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18 Dec 2013
RBA Stevens - Key headlines
FXstreet.com (Bali) - RBA Governor Glenn Stevens is speaking in the Australian parliament before the House of Representatives’ Standing Committee on Economics. Below are the most relevant headlines so far.
Key Quotes
"Looking ahead, resource sector investment will decline – gradually at first but more quickly thereafter. It will most likely fall considerably over the next few years. There is therefore scope for other forms of private demand to grow more quickly, the more so as government spending is scheduled to be subdued."
"Investment in dwellings shows clear signs of a significant increase, and exports of resources will continue to rise strongly. It is likely that capital spending by firms in some sectors outside the resources sector will eventually pick up, but this will take some time yet and it will be against the backdrop of a challenging environment."
"Higher wealth and confidence could see the saving rate decline a little, but consumption will not be the same driver of growth that it was before the financial crisis."
"Putting all this together, our expectation is that the below-trend growth in GDP we have seen for a while now will probably continue for a bit longer yet. Over the more medium term, there are good grounds to think that growth can strengthen."
"The Bank has described the exchange rate as ‘uncomfortably high’, and suggested that balanced growth in the economy would probably require a lower exchange rate."
"The Board has maintained an open mind about whether we may need to lower interest rates further. At this point, however, there are few serious claims that the cost of borrowing per se is holding back growth. On the contrary, monetary policy is supporting higher spending by altering incentives as between spending and saving, and working to create an environment in asset and credit markets that eases the restraints on some sorts of activity."
Key Quotes
"Looking ahead, resource sector investment will decline – gradually at first but more quickly thereafter. It will most likely fall considerably over the next few years. There is therefore scope for other forms of private demand to grow more quickly, the more so as government spending is scheduled to be subdued."
"Investment in dwellings shows clear signs of a significant increase, and exports of resources will continue to rise strongly. It is likely that capital spending by firms in some sectors outside the resources sector will eventually pick up, but this will take some time yet and it will be against the backdrop of a challenging environment."
"Higher wealth and confidence could see the saving rate decline a little, but consumption will not be the same driver of growth that it was before the financial crisis."
"Putting all this together, our expectation is that the below-trend growth in GDP we have seen for a while now will probably continue for a bit longer yet. Over the more medium term, there are good grounds to think that growth can strengthen."
"The Bank has described the exchange rate as ‘uncomfortably high’, and suggested that balanced growth in the economy would probably require a lower exchange rate."
"The Board has maintained an open mind about whether we may need to lower interest rates further. At this point, however, there are few serious claims that the cost of borrowing per se is holding back growth. On the contrary, monetary policy is supporting higher spending by altering incentives as between spending and saving, and working to create an environment in asset and credit markets that eases the restraints on some sorts of activity."