Reserve Bank Governor Addresses Senate

Glenn Stevens made a statement to the Senate today in relation to the government's economic stimulus. There is nothing particularly revealing but more detail may be provided in the Q&A. Please find a link to it below and a couple of concluding paragraphs that relate to monetary policy. The statements clearly imply that they want to be pre-emptive to keep a lid on inflation if it looks like returning. I still don't think an October tightening is likely however as they need evidence that the economy can hold up with the stimulus dissipating.

http://www.rba.gov.au/Speeches/2009/sp-gov-280909.pdf

On the monetary side, the inflation targeting framework the Reserve Bank has been
following for a decade and a half will guide adjustments to interest rates. These will
be timely and ahead of a build-up of imbalances that would occur if interest rates
were kept low for too long.

These frameworks will, in other words, prompt the needed adjustments. It was the
preparedness to make those adjustments in the past, guided by these very
frameworks, that contained the build-up of imbalances in the upswing and which in
turn earned us the scope to take bold measures to support demand when a recession
loomed. A continuation of that approach into the future will serve us well.