The Aussie dollar and Canberra’s political wrangling were the primary focus of RBA Governor Glenn Stevens comments in a wide-ranging interview with the AFR, but he also had a pointed message for Australian consumers and business about the state of the domestic economy.
Stevens effectively said that we are too focused on the negatives and need to be a bit more glass half-full-not-empty in our approach.
He echoed the recent comments of his colleague, Deputy Governor Phil Lowe, that the level of consumption growth Australia enjoyed in the past was unusual saying “the notion that the consumer would be the driver of growth in the way they were in some of those earlier periods, that isn’t going to happen; we have been saying that for some time”.
But he added as a message to the media, politicians, and people more broadly that they should stop being so downcast:
This issue of transition, of adjustment, is something that we have had for a couple of years and we’re probably still going to have some of it for a little while yet. You can’t make that go away. What you can do, I think, is articulate it, face up to it, and then do the adjustment as best we can.
I think right now what we need is a little more confidence in our own ability to make that adjustment; a more positive narrative around the idea of “Yes, we can do this adjustment if we put in the effort.”
We need a bit more of that right now I think and a bit less of the negative “it’s all too hard” sort of narrative that is so easy to tell.
Some commentators, such as the ANZ’s economics team, believe comments like this, coupled with his comment that by holding rates stable the RBA gives confidence its best chance of recovery, make it sound like Stevens and the RBA board are reluctant to cut rates further.
Stevens is trying to convey the message that the RBA is a steady hand on the tiller and Australian can rest easier knowing that.
Australia, your glass is still half full.