FED:World economy growing stronger, RBA says=4

AAP General News (Australia)
02-11-2011
FED:World economy growing stronger, RBA says=4

Mr Stevens said underlying inflation had fallen by a "substantial amount" from the peak in 2008.

"It is worth recording that a combination ... of a five per cent unemployment rate
and an inflation rate clearly in the two's is a pretty favourable one by the standards
of recent decades," Mr Stevens said.

The Reserve Bank has an inflation target of two to three per cent.

He said, as a result of the increase in the cash rate in November, and changes made
by the banks to lending rates, interest rates being paid by borrowers were a bit above
average compared with the past 15 years.

The rise in the Australian dollar to its highest levels since it was floated was not
especially surprising given the level of the terms of trade.

"Nonetheless, it is exerting dampening pressure on the traded sector outside of the
resources sector," he said.

He said financial conditions were on the firm side.

"Having reached that position in a fairly timely fashion, the board has judged it to
be sensible of late to leave the cash rate steady."

AAP cb/dlm/was

KEYWORD: RBA 4 CANBERRA

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