Crikey

Try looking on the bright side of the interest rate rise: the combined wisdom of our central bank mandarins and board reckon the global credit market shakeout is nothing to worry about.

And that’s the same message the Federal Reserve board delivered overnight. The word from both is that, instead of panicking about the “Big One”, kick back and enjoy the global growth ride for an indefinite period.

RBA governor Glenn Stevens made two important points in his statement this morning.

Firstly, he certainly left the door open for another rate rise at the board’s Melbourne Cup meeting should the September CPI numbers be anything like the June quarter’s.

The other was a vote of confidence in the global, and therefore domestic, economy:

Credit markets in the US have experienced some turbulence in recent weeks, which may pose downside risks to the US economy. While this will need to be kept under review, developments to date do not appear to have changed significantly the broader global outlook. Even with the US slowing down, forecasts of global growth have recently been revised upward. High world commodity prices remain an important source of stimulus to Australia’s national income and spending.

And thus the Guv says the end of the world is not nigh at all. Which is pretty much what the US Fed decided as well:

Economic growth was moderate during the first half of the year.

Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters, supported by solid growth in employment and incomes and a robust global economy.

The central bankers aren’t nearly as concerned as the headline writers.