Australia’s central bank governor predicted Thursday that the worst of the global financial crisis is probably over for the country and suggested further rises in interest rates to contain inflation.
The Reserve Bank of Australia sent ripples through international markets earlier this month when it made the nation the first advanced economy to raise its key interest rate after slashing it to its lowest level in almost 50 years to try to offset the downturn.
Gov. Glenn Stevens said in a speech Thursday that the very low interest rates -- they hit 3 percent before the Oct. 6 rise to 3.25 percent -- were based on predictions that the economy would weaken more than it did.
He said “the risks of really serious economic weakness have abated” and that “Australia has had an experience that, even if labelled a recession, was a pretty mild one.”
Gradual growth in the economy was likely to continue in 2010, and the bank board now had to consider the threat of rising inflation, he said.
“If we were prepared to cut rates rapidly, to a very low level, in response to a threat but then were too timid to lessen that stimulus in a timely way when the threat had passed, we would have a bias, a very serious bias, in our monetary policy framework,” Stevens said in his speech to a business forum.
