SYDNEY (Reuters) - Australia is finding the transition from mining-led growth to other forms of activity to be a bumpy one, with business and consumer confidence still lacking, the head of the country’s central bank said on Friday.
Reserve Bank of Australia (RBA) Governor Glenn Stevens said the decline in the local dollar would help support the economy, as would the recovery in the United States and lower global oil prices.
“It is a major transition. We can hope to assist it, and the Reserve Bank is doing that, and will continue to lend what support it can,” Stevens told the American Chamber of Commerce.
“But we have always said we cannot hope to fine-tune this transition, however much we may wish otherwise.”
Stevens offered nothing new on the outlook for interest rates, noting only that the bank “has talked about lowering them further.”
The RBA cut rates to a record low of 2.25 percent in February and has made it clear it will ease again if the economy shows no signs of picking up.
Stevens noted that past mining booms had almost all ended very badly for Australia, usually through runaway inflation followed by a major crash.
Even if we have a period of sub-average growth in the process, we will have done far, far better than in any previous event of this kind, let alone one of this magnitude,” he said.
“I still think that is the most likely outcome.”
Reporting by Wayne Cole; Editing by Eric Meijer