Glenn Stevens, the Governor of the Reserve Bank of Australia, has appeared before the House of Representatives Standing Committee on Economics.

Stevens told the committee that economic growth “was probably about trend in 2012 as a whole” but “our sense is that the economy has entered 2013 at a pace a little below that”.

Stevens said that “the economy will be adjusting to the peak if the mining boom and some other areas of demand will have room to grow more quicly than they have in recent years”. He said the threat of extreme financial instability in the euro area “has abated” and the United States has avoided the worse of the “fiscal cliff”. He said the slowdown in China has come to an end.

Text of opening statement by Reserve Bank Governor Glenn Steven to the House of Representatives Standing Committee on Economics.

In the six months since the August hearing, economic and financial conditions abroad have generally improved. We can see three key sets of developments.

First, the threat perceived in the middle of last year of extreme financial instability arising in the euro area – and, in the eyes of some, possible disintegration of the euro – has abated. This followed various important steps taken by European policymakers. Interest rates faced by some of the key sovereigns which were under acute pressure have declined markedly, and funding conditions for many European banks have improved to the point where some of the central bank funding that had been supplied has been repaid. These countries, and Europe generally, still face immense challenges and it is, as usual, important to stress that sentiment remains vulnerable to setbacks. But a truly disastrous outcome was, once again, avoided. [Read more…]