Egypt News

Mr Stevens also did little to discourage talk of another interest rate cut.
He told the business dinner the central bank's monetary policy was currently in neutral settings and an expansionary policy would be considered at the board's meeting in December.

The official cash rate was cut by three-quarters of a percentage point this month and a similar reduction is being predicted for next month.
Mr Stevens said Australia is well placed to handle a slowing economy.

"Given that we have that scope and given the underlying strengths of the economy, about the biggest mistake we could make would be to talk ourselves into unnecessary economic weakness," he said.

He also says Australia's house prices will soften but should not crash because of the world economic crisis.
Answering a question from the floor at a the dinner, Mr Stevens said the ratio between house prices and household income was historically "very high", partly because Australia needed to boost its housing stock.

But in the United States, where house prices are dropping sharply, there is an oversupply of houses.
"I suppose that one difference that we have to the US is that they built too many houses and they have got to work off that excess stock, which is actually one of the things that has put them in the recession," he said.

"The rate of house constructions is at its lowest point for 20 or 30 years, and the stock is coming down quite quickly now actually, but that is a painful process.

"We didn't build too many. We're probably not really building enough. That's what most of the experts say."
But he said Australia's lack of a "supply overhang" was no guarantee prices would not fall.
"Indeed, prices probably are falling - gently," he said.

"But I think there are enough differences in the US versus Australia dynamic between the US.
"We certainly shouldn't assume there is going to be a crash but some combination of a general decline in prices and gradual growth of income [is expected]."

Mr Stevens gave a light-hearted response to another question about whether he preferred the stable economic situation when he was appointed in 2006 or today's more challenging times.
"It's certainly not dull. I'm hoping for boredom before much longer," he said.

EGYPT NEWS

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