Euro debt may spark more global jitters
FRANKFURT: The Reserve Bank has acknowledged Europe's fast-spreading debt problems are emerging as a threat to the Australian economy and could set off a round of jitters in global credit markets.
The dominance of Europe in discussion at the RBA's last monthly board meeting suggests it is now paying closer attention to how the debt crisis is playing out. The December 7 meeting was held before last week's move by ratings agency Moody's to cut Ireland's credit rating to three notches above junk.
But minutes of the meeting, released yesterday, suggest the RBA is sticking to its mediumterm view of the domestic economy, with growth here underpinned by the continued strength of Asia's key drivers, China and India. The minutes provide economists with an insight into the central bank's thinking on the factors bearing on monetary policy. Whether the RBA would have left the cash rate at 4.75 per cent, as it did, on December 7 in the absence of Europe's troubles is not clear from the minutes. -PB News