Global Power | Local Knowledge | Uniquely Personal
中文

Central bank remains optimistic...

Central bank remains optimistic about the future of the economy

Australia's top banker gave a positive outlook for the economy moving forward on Tuesday (November 24th) which, while not specific, was very optimistic for growth across the course of the coming months. 

Reserve Bank of Australia (RBA) governor Glenn Stevens said that in the next two years, the nation should generally see growth and continued positives. He did, however, go on to say that Australian markets across the sectors are overreacting to minute changes in forecasts which were by their very nature imprecise, saying they need to have a calmer approach. 

"One can't help but observe that, in common discussion about the economic outlook, we too often ignore the influence of demography," Mr Stevens said, as he urged greater focus on larger global forces including demographics and technological change.

Looking backwards, Mr Stevens said that too many markets were becoming obsessed with every change that took place in the RBA's forecasts and outlooks for the economy, no matter how small. 

"This fervent desire for precision is not supported by any demonstrated accuracy of economic forecasts," said Stevens. 

"Its cousin, a hankering for policy fine-tuning, is barely, if at all, better supported by the historical outcomes of economic policymaking," he added.

As for what will happen moving forward, there will be rumours once again that the central bank is about to increase the base rate from the historic low of two per cent, which it has resisted doing time and time again. Mr Stevens suggested that in the next two years, if inflation remains restrained, the RBA may opt to increase the base rate at long last. 

However, he did also say fundamentals were already in place for a pick up in economic growth over the next couple of years, which means that there are suggestions that the economy will grow on its own without the need for movement on the base rate. 

All information provided is of a general nature only and does not take into account your personal financial circumstances or objectives. Before making a decision on the basis of this material, you need to consider, with or without the assistance of a financial adviser, whether the material is appropriate in light of your individual needs and circumstances. This information does not constitute a recommendation to invest in or take out any of the products or services provided by SMATS Services (Australia) Pty Ltd or Australasian Taxation Services Pty Ltd.

Subscribe Now