-Glenn Stevens, RBA Governor
Speaking at a bi-annual appearance before the House of Representatives standing committee on economics, Reserve Bank of Australia Governor Glenn Stevens warned that interest rate cuts may not be as effective as they used to be in the past. Thus, the Governor is hinting that the RBA will not follow other major central banks that slashed rates to zero and printed cash to kick-start their economies. However, Stevens underlined that he did not believe that monetary policy had reached the point where it was unable at all to provide additional boost to the economy. The central bank cut the cash rate for the first time in 18 months last week to a historic low of 2.25%.
As to the labour market, Stevens warned that the unemployment rate would continue climbing in the months ahead, as the Australian economy continues to suffer from the end of the mining boom. The Governor highlighted that the economy has to expand more rapidly to keep up with population growth. The jobless rate, which hit its highest level for 12 years in January, will continue to rise by a tenth of a percentage point "for a little while". Meanwhile, the Governor changed his rhetoric concerning the Australian Dollar, saying that he is more comfortable with the exchange rate. The nation's currency had begun to adjust more appropriately to economic developments, as the Aussie had dropped significantly versus the Greenback.
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