The Governor of the Reserve Bank Glenn Stevens has stated that he is glad that he did not have to cut interest rates to zero per cent, and that Australia's medium term prospects were looking good and that rates would rise.
Mr. Stevens told a Senate committee hearing in Sydney that it was to our advantage that we did not have a zero interest rate.
Mr. Stevens stated publicly, a few months ago that the Reserve Bank would do more if it had been necessary, but as it turned out it was not needed.
Mr. Stevens also stated that the global recession had been a mild downturn in Australia and growing confidence meant that the economic outlook was good.
Mr. Stevens told the Senate Economic Reference committee yesterday that Australia's medium-term prospects remained good and that we should not lose confidence.
There has been a substantial pick up in measures of business and household confidence since the low points earlier this year.
The committee which is inquiring into the Federal Government's fiscal stimulus measures has been told by Mr. Stevens, that by the standards of past weakness this has been a mild downturn. Even though the evidence is still incomplete this episode has been less serious than those in the mid 1970's the early 1980's and the early 1990's.
Compared to many other countries where deep recessions have been experienced, Australia has done quite well this time around.
Mr. Stevens reiterated that the fiscal and monetary policy stimulus actions taken to support Australia during the global downturn would need to be removed.
In the case of monetary policy, the banks have already indicated that interest rates could soon be on the move as we start to recover.
In conclusion Mr. Stevens said that these measures had supported demand over the last 9-10 months.