Tuesday, September 22, 2015
The Reserve Bank governor has presented an optimistic view of the Australian economy, saying it could weather a serious Chinese downturn.

In his semi-annual testimony before the federal House of Representatives Economics Committee, Glenn Stevens slammed much media and economic discussion on the economy as "more negative than the facts actually warrant".

"It ain't all home and hosed and all happy days, but it is not as bad as much commentary that I read would lead one to believe," he told the committee members.

Mr Stevens' positive view appears to lower the chances of the Reserve Bank cutting the official cash rate further from its current record low level of 2 per cent.

The RBA governor even implied that a hard landing for China's economy, where annual growth would drop dramatically below 7 per cent, may not be enough to trigger another interest rate cut.

"You would expect in that world the [Australian dollar] exchange rate's probably going to go down, probably quite a bit, and that will be one of the key mechanisms that helps the Australian economy cope," Mr Stevens observed.

Not that the RBA boss expects that to happen.

Mr Stevens said recent share market turmoil has not fed through significantly into debt markets for sovereigns, banks and most other companies, implying that the global economy is far from a crisis.

"Things could change but, at present, we do not see anything approaching the dislocation of funding channels that you see in serious crises," he added.

Mr Stevens also played down weak Australian economic growth figures for the June quarter released earlier this month, which showed that GDP grew just 0.2 per cent over that three-month period.

"The March quarter exaggerates strength and the June quarter exaggerates weakness in the GDP as measured," he noted, although the annual growth rate was also quite weak at only 2 per cent.
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