Australians will eventually slow their saving and pick up their spending, RBA governor Glenn Stevens has claimed.
During his speech to the Anika Foundation in Sydney yesterday, Mr Stevens remained upbeat about the economy, prompting the markets to pare back the risk of a rate cut in the next three months from 70 per cent to 50 per cent.
Mr Stevens assured embattled retail shoppers would eventually return to their stores once their desire to save a lot eventually plays itself out.
He said the abrupt downturn in household consumption had followed a decade of strong growth in which borrowing had surged and saving rates had plummeted.
“It was always fairly likely in hindsight that we were going to see much more subdued growth in consumption for a while, but that adjustment has proceeded quite a long way already and that’s actually a point of optimism for the future,” Mr Stevens said in his speech.
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