RBA Guv’nor Glenn Stevens spoke yesterday about the Asian financial crisis of 1997 — a tenth anniversary oration.

His conclusion:

The Asian crisis was an extremely costly event for the countries concerned. The crisis is now a decade in the past, but those costs continue to be felt today in a number of countries.

The crisis dramatically changed thinking in Asia, and around the world, about the nature of economic and financial crises, the policies appropriate to dealing with them, and the role of the various regional and global bodies charged with fostering economic and financial stability. It is important that the passage of time, and the apparently benign environment we have recently enjoyed, do not prevent us from pressing on with the as yet uncompleted regional and global efforts to develop more resilience. Were we to slacken efforts there, we would surely come to regret it.

This was a worthy talk, full of wise statements and nice graphs. The press seemed to leave it alone — certainly little Henry could find at 9pm last night, though a breathless ABC reporter said the address had driven the dollar higher. Presumably this was caused by a hint in question time that there might one day be another rate hike sometime this century.

The online headline in the AFR, courtesy of Reuters, said “Stevens not surprised by dollar’s strength” — a theme taken up this morning by David Uren. Someone should tell the relevant reporters that the RBA Gov’ner is like the Pope — bloody infallible, would not be surprised (perhaps mildly disappointed) if the sun failed to rise tomorrow.

The good folk at St George reported yesterday on the economy — watch as the price of oil heads upwards, effects on the price of petrol for us offset by the rising dollar, Australia doing well despite some weaker activity data recently:

After a strong run, recent domestic economic releases (most notably retail sales and employment) have been softer. Rather than reflecting an economy that has lost momentum, this is more likely an illustration of the volatility of monthly economic data. Accordingly, our view of the economy remains unchanged, being one of solid growth yet contained inflation.

Henry adds that the weakness of domestic demand might well be part of a swing to exports as a major engine of growth — if so, a very welcome development.

Read more at Henry Thornton

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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