Reserve Bank of Australia governor Glenn Stevens.
Reserve Bank of Australia governor Glenn Stevens. DAN Peledaap

Expect more falls in exchange rate: RBA Governor

THE governor of the Reserve Bank of Australia says a further fall in the exchange rate is on the cards and is expected to stimulate growth in the economy.

Glenn Stevens on Wednesday fronted an Economic Society of Australia lunch and in his published address he said public spending had weakened and inflation was likely to remain low.

"So even if the exchange rate were to fall further, which in my view it needs to, we seem unlikely to have a problem with excessive inflation," he said.

"Putting all that together, as things stand, the economy could do with some more demand growth over the next couple of years."

The governor pointed to infrastructure spending as way to sustain growth and generate confidence.

"It would be confidence-enhancing if there was an agreed story about a long-term pipeline of infrastructure projects.

"The real economy would benefit from the steady pipeline of construction work - as opposed to a boom and bust," he said.

"It would also benefit from confidence about improved efficiency of logistics.

"We could unleash large potential benefits that at present are not available because of congestion in our transportation networks."

He said the resources sector had a good deal further to fall and the decline in mining investment would perhaps accelerate.


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