Australia has scope for monetary, fiscal easing

Sydney

AUSTRALIA'S economy was improving and its financial system sound, a top central banker said on Tuesday, though he called recent evidence on jobs growth more "ambiguous".

Reserve Bank of Australia (RBA) governor Glenn Stevens made no comment on the immediate outlook for further rate cuts, but did note that there would be scope for monetary and fiscal easing should the world face another financial crisis.

"At the turn of the year the Australian economy seemed to have been picking up," said Mr Stevens, who was giving a speech on how Australia would fare in the event of another global crisis. "That's a good starting point."

Recent data showed the economy grew at a 3 per cent pace over 2015, above the RBA's and most analysts' forecasts. "In the case of business surveys, better conditions seem generally to have continued in the early part of 2016, though labour market data have been more ambiguous," Mr Stevens added.

The government's labour data has showed a slowdown in jobs growth over the past three months following a run of very strong gains. The RBA has in the past noted that a rise in unemployment would have a major effect on whether it chooses to cut rates.

On Tuesday, Mr Stevens said only that there was scope to act if needed. "Even with interest rates at already low levels, and public debt higher than it was, there would, in the event of a serious economic downturn, be more room to ease both monetary and fiscal policy than in many, indeed most, other countries."

Mr Stevens said Australia's financial system should also prove resilient to further shocks, with the quality of banks' assets improving and unrestricted access to global capital markets. REUTERS