RBA sets scene for interest rate rise

Reserve bank governor Glenn Stevens has set the scene for a pre-Christmas interest rate rise, declaring the Australian economy is already recovering from a mild downturn.

Stevens this morning told a Senate economics committee that unemployment may have already peaked at its current 5.8 percent and that now may be the time to start winding back fiscal stimulus measures such as the Federal Government’s stimulus package, and the current interest rate “emergency settings.”

”We are in recovery now I think and it is important that these measures be wound back over time,’’ he said of the fiscal stimulus and the Reserve Bank’s three percent cash rate.

He suggested that the Reserve Bank might even upgrade the economic forecasts it made only last month and that the budget deficit and government debt were unlikely to increase as much as forecast.

Reserve Bank Governor Glenn Stevens has set the scene for a pre-Christmas interest rate rise, declaring the Australian economy is already recovering from a mild downturn.

“We are in recovery now I think and it is important that these measures be wound back over time,” he said of the fiscal stimulus and the Reserve Bank’s three percent cash rate.

He suggested that the Reserve Bank might even upgrade the economic forecasts it made only last month and that the budget deficit and government debt were unlikely to increase as much as forecast.

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