Stevens offers hope on rates: Economy roundup

Reserve Bank of Australia governor Glenn Stevens has given an optimistic assessment of the interest rate outlook in a speech delivered in Sydney yesterday.

Reserve Bank of Australia governor Glenn Stevens has given an optimistic assessment of the interest rate outlook in a speech delivered in Sydney yesterday.

Stevens told the audience that he believes there is a good chance inflation will be kept low over the medium term.

“It looks more likely now than it did a couple of months ago that this more moderate track for demand will continue,” Stevens said.

Another sign of slowing growth emerged today, with merchandise imports in June falling 4% to just over $17.5 billion, a decrease of $664 million.

There was also a little bit of economic sunshine in the US overnight, triggering buying on a sharemarket desperate for even a skerrick of good news.

A better than expected profit announcement by bank Wells Fargo triggered a wave of positive sentiment that sent the Dow Jones Index 2.5% higher to 11,239.28.

The US market was so focused on the good news that it refused to be distracted by a quite terrible set of inflation numbers – CPI up 5% over the past year, the biggest price jump since 1991.

Australian markets have also moved into positive territory this morning, with the S&P/ASX200 up 1.2% to 4927.8 at 12.20pm.

The Australian dollar has today come back a bit from its US98c-plus highs of recent days, but at 12.20pm was still trading at a relatively strong US97.67c.