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The Australian economy is likely to face further slowdown but it remains better positioned than most other developed countries to weather the global recession according to the Reserve Bank.
In a speech in Sydney yesterday, RBA assistant governor Malcolm Edey warned that further weakness for the economy was unavoidable in 2009.
However, he pointed out that Australia was fortunate to have come into this current period in “better shape than most, with sound financial institutions and with more scope than most for macroeconomic policies to respond as needed”.
Compared to the United States and UK, where the cash rate now sits at a range of 0 to 0.25 per cent range and 0.5 per cent respectively, Australia still has significant room to move with monetary policy.
At its monetary policy meeting earlier this month the RBA left the cash rate at 3.25 per cent to allow both time to judge existing measure in place and to leave “adequate flexibility for policy at future meetings”.
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