 Interest rates can't remain low
Glenn Stevens expressed another flattering assessment about the Australian economy while he spoke at the business forum in Toowoomba. He said Australia’s economy has surprised the Reserve Bank as it kept buoyant throughout the financial crisis and showed a swift upturn right after.
Steven mentioned that unemployment rate is lower than what the RBA had forecast a year ago, while the GDP is higher than what it predicted.
He said borrowers should not be expecting interest rates to be extraordinary low because when the economy is growing and when the inflation is bordering on target, interest rates will likewise ascend to average.
Stevens put emphasis on the rising commodities which help boost Australia's national income.
" Australia's terms of trade will, it now appears, probably return during 2010 to something pretty close to the 50-year peak seen in 2008," he explained.
He said that the bank is closely monitoring the effect on inflation, which is feared to fall below two to three percent target.
According to Stevens 18 months ago the board had hurriedly established a much lower interest rates due to the economic uncertainty. Yet interest rates could not stay at 'emergency' lows if the economy has improved.
Meanwhile the bank’s governor issued an appeal for understanding from home owners with mortgages.
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