RBA Chief Says Central Bank Actions Reaching Diminishing Returns

The turmoil in global financial markets of recent months was overdone and not of itself a risk to the outlook for world growth, Australia’s top central banker said on Tuesday.

Speaking on the international outlook in New York, Reserve Bank of Australia (RBA) Governor Glenn Stevens also said central banks globally were reaching the limits of what they could achieve through monetary policy.

“Surely diminishing returns are setting in,” Stevens said of ever more exotic policy step.

“Maybe this has something to do with market confidence being easily rattled,” he added “There was a hint in the recent episode of the feeling that central banks didn’t have much left they could do, if things got worse.”

Still, Stevens argued the wild swings seen in markets were an over reaction to signs of a softening in world economic growth. The latest rebound seen in many markets suggested that it was not the start of a major financial shock that could derail growth further, said Ste ..

Via Economic Times

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