Reserve Bank of Australia Governor Glenn Stevens addressed the House of Representatives today in Canberra. The Governor highlighted several important topics to take note of.
- The RBA believes that the worst of the turmoil was shortlived but that the events had a severe impact on the outlook of the global economy.
- Governor Stevens believed that the amount of liquidity provided to banks helped in stabilizing what could have been a catastrophic meltdown of the global financial system.
- September and October of 2008 took a toll on households and business confidence around the world. Consumers have reined in spending while businesses have put off expansion.
- The last quarter of 2008 saw a sharp contraction, the most in decades, and this affected all nations to include the industrialized and emerging markets.
- Local businesses are still anticipating tough times ahead.
- The economy deteriorated so rapidly that no amount of policy response could have prevented a period of near term weakness.
- The Australian economic structure is well placed to benefit from a renewed expansion when it does come about.
Forex Technical Reaction: The aussie had quite a jump after Mr. Stevens gave his testimony. The pair strengthened 40 pips to test the previous days R2 level which still has some significance this early into a new trading day.
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