Mr. Stevens During His Testimony Indicates That Raising Rates Is Inevitable In The Close Future

Daily Forex Fundamentals | Written by ecPulse.com | Aug 14 09 07:15 GMT |

Mr. Stevens Australia's central bank governor indicated today that the Australian economy conditions are ideal taking into consideration the present global economy developments, determining the monetary policy officials to abandon the extra ordinary policies, and increasing believes that the next step taking by the central bank will be raising rates. These remarks came during Mr. Stevens the semi-annual testimony to the Economic Commission of the Australian Parliament; and according to him, the fundamentals released by the Australian economy indicate that the economic performance slowdown, which Australia experienced economy due to the drop in global demand and the deterioration in the financial markets, is over. The stimulus plan adopted by the Australian government along side the aggressive reduction in interest rates by the central bank which reached to their lowest in almost half a contrary, were able to help the economy surpass the distress that prevailed the entire globe as the economy was able to see positive growth during the first quarter of this year and thereby avoid falling into recession. The direction in which the Australian economy in moving into may be far too positive for the radical steps taken by the Central Bank and the Australian Government in order to support growth, thereby it may appear some negative and undesirable results. As the improvement in export was able to determine confidence to rise among investors and companies, having a positive impact on investment levels that increased and on money supply that rose after consumer spending stabilized. And from these circumstances may result some inflationary pressures that the central bank does not desire, and to avoid such developments Mr. Stevens said that a tighter monetary policy is inevitable in the close future, and the start of this procedure which gives the ability to the central bank to control the liquidity volume in the markets is by holding rates unchanged which the central bank recently did, before raising it again. Mr. Stevens didn't neglect to mention the improvement in the economic fundamentals, which indicated that the recession the economy almost fell into is fading, and that the economy started recovering from consequences of this severe financial crisis that managed to hurt the entire planet which turned out to be the worst since the great depression. The Australian central bank sees that more risks may arise if inters rates will be kept at those very low levels for more time, as it may lead to imbalances in the Australian economy which already started to give clear signs of recovery. The central bank also noted earlier that the recovery seen by the Chinese economy has increased demand for Australian exports, since China is one of the main trading partners, and this will be able to support growth during the next periods even more. Besides this, the positives effect resulted from the reduction of interest rates by 4.25% is still seen throughout the performance of the financial and banking sector, alongside the effects from the stimulus plan adopted by the government and which reached to 12 billion Australian dollars that was directed to the domestic sector in order to encourage spending, and the other stimulus plan totaling 22 billion Australian dollars directed to infrastructure projects. All these were able to support the entire economic performance and maintain a balance of supply and demand, which ultimately drove Australia to safe land Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk