Treasurer: Australian Reserve bank highlights global economic challenges

13:41, October 20, 2009      

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Australian Treasurer Wayne Swan said on Tuesday the latest Reserve Bank of Australia (RBA) board minutes highlighted the challenges facing the global economy.

Prospects for most of the developed world were still uncertain and the possibility of another downturn in some countries could not be ruled out, Swan said, quoting the minutes of the October board meeting.

It was at that meeting the central bank raised its cash rate for the first time in 19 months.

"We must be very cautious as we move forward because there is still an uncertain international environment," Swan said.

The RBA indicated that the government's fiscal stimulus had already peaked and was beginning "to taper away".

The Australian people recognized this and it was very important to a sustainable recovery in the face of what was still a challenging environment.

However, Swan said confidence remained strong for both business and consumers, both at their highest levels since 2007.

Consumer sentiment - which is almost 50 percent higher than pre-stimulus levels of October last year - was around double the improvements seen in the U.K. and the United States.

"This reflects the fact that stimulus has kept customers going through the door, kept more Australians in work, and that is what has provided this vital boost to confidence," Swan said.

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