Fed: RBA says sub -prime crisis unlikely to affect business

AAP General News (Australia)
08-17-2007
Fed: RBA says sub -prime crisis unlikely to affect business

GOLD COAST, Aug 17 AAP - Reserve Bank governor Glenn Stevens says the current sub-prime
crisis affecting global markets is unlikely to affect Australian mainstream businesses.

Speaking at a House of Representatives inquiry on the Gold Coast, Mr Stevens said the
current financial market volatility was mainly impacting on financial institutions.

"I don't think it has really had any great effects on your average, everyday business," he said.

"It is true the share market has been volatile, but actually share prices are still
historically pretty high, so I doubt that we are likely to see a big impact on the confidence
of mainstream business from this financial volatility in the near term.

"The longer term risk would be if there is a serious tightening of credit conditions
globally, that then led to a withdrawal of credit provision in the real economy - now
I don't think that is happening at the moment.

"Clearly that is a risk one has to be on the alert for, and we are.

"But I doubt very much that as yet anything has happened on money markets, foreign
exchange markets, or even share markets is going to seriously dent the real fundamentals
for mainstream business, which is very good."

AAP nt/klm/sp

KEYWORD: RBA BUSINESS

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