RBA Boss Defends Monetary Policy
The Reserve Bank governor has issued a staunch defense of monetary policy in the face of Australia’s two-speed economy. There is some concern that lifting rates to cool the effect of the mining boom on the economy hurts non-mining parts of the country.
In a rare speech in regional Australia, Glenn Stevens addressed criticisms that resources-driven states such as Western Australia and Queensland were out of sync with the economic reality experienced by the eastern states.
“In Western Australia, mining accounts for a quarter of production; it is only 2 per cent of production in Victoria,” he told an audience in the Victorian town of Shepparton.
“So it would seem obvious that the impact of an event that increases the demand for minerals is likely to see, in time, the output of WA given more of a boost than Victoria.”
But Mr Stevens pointed out that the picture is a little more complicated than meets the eye.