Reserve bank chief sees brighter times, but no more rate cuts

The Reserve Bank Governor Glenn Stevens says its becoming “much easier” to imagine “upside risks” in Australia’s economic outlook.

As the bank is traditionally committed to keeping inflation firmly under control, this comment is being seen as an indication that further interest rate cuts, on the bank’s part, are unlikely.

But Mr Stevens, who was addressing business leaders at a lunch in Sydney yesterday, also said that Australia may now have an opporltunity to increase its housing stock, without increasing house prices.

He said it would be very disappointing if it did not do so.

However Mr Stevens said Australians should not look for “easy prosperity.”

That would  be a mistake.

He added, though, that confidence seemed to have regained ground in Australia.

“We cannot claim that Australia has avoided any downturn at all,” Mr Stevens said.

“It appears at this stage, however, that the downturn we are having may not turn out to be one of the more serious ones in the Post War era.”

Mr Stevens that contrasts with the experience of many other countries.

“It is becoming much more common for Australians to see the glass as half full than as half empty,” Mr Stevens said.

Mr Stevens predicted that the economic emergence of China and India would continue in the years ahead.

But he said that would present challenges as well as opportunities.

see the full speech at www.rba.gov.au