Reserve Bank of Australia Governor Glenn Stevens endorsed the current level of interest rates and said he’d need to be confident the currency is “seriously overvalued” before considering intervention to weaken it.
“There is a good deal of interest rate stimulus in the pipeline,” he said today in semiannual testimony to a parliamentary panel in Canberra. “It is having an effect.”
The local currency and bond yields rose as Stevens said an overnight cash rate target at 3 percent is appropriate. The RBA chief reiterated that rate cuts are more likely than increases as he aims to rebalance a two-speed economy where mining regions in the north and west thrive while manufacturers, builders and retailers in the south and east struggle.
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