The central bank says the outlook for the global financial system is less worrying than it was a year ago at the height of the global financial crisis, but there are still challenges ahead.

Regulators will have their work cut out trying to adapt supervisory frameworks to reduce the chances of a repeat of the fallout that occurred in late 2008, starting with the collapse of US investment bank Lehman Brothers.

“Realistically, the task is to reconfigure regulatory frameworks to lower the probability, and the cost, of future crises while assisting recovery from the recent one,” Reserve Bank of Australia (RBA) governor Glenn Stevens said on Tuesday.

“That is every bit as difficult a challenge as getting through the immediate crisis itself.”

One of the most difficult issues will be the supervision of so-called “too-big-to-fail” banks or institutions, corporations deemed too important to be allowed to go under when crises develop.
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The global economy went on an optimism binge in 2006 and 2007, suffered a breakdown 2008 and will spend 2009 in rehab.

And, as is the case with pop stars and football players, the result of the rehabilitation process can never be predicted with great accuracy.

This is not to say the outlook for 2009 is any more obscure that it was a year ago, for 2008.

But there should be no illusions about the economic uncertainty facing the nation.
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The Reserve Bank of Australia (RBA) is set cut interest rates further as sluggish global growth threatens to push the domestic economy into recession, economists say.

Central bank policy makers expect inflation to peak by the end of 2008, but a weaker Australian dollar is tipped to delay the moderation in price pressures.

The RBA said today it expects the Australian economy to grow by an annual pace of 1.5 per cent in the year to June 2009.
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The Reserve Bank of Australia (RBA) has left the door open to further falls in official interest rates, after revising down its estimates for economic growth and warning of the need to avoid a sharp slowdown in the months ahead.

The central bank today said growth in domestic demand had moderated significantly in recent months and that given the weakness in the global economy it expected the local economy would “remain below trend for some time.”

The RBA also said it appeared likely its preferred measure of underlying inflation was nearing its peak in quarterly terms and would “begin to decline” in the next few quarters.
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Share market slides, tight credit conditions and faltering demand will weigh down Australia’s economic performance in coming months, a report says.

But the economy is not expected to be in a worse position than in the aftermath of the millennium tech wreck of seven years ago as the Reserve Bank of Australia (RBA) delivers more rate cuts.

The Westpac-Melbourne Institute leading index, which measures the likely pace of economic activity three to nine months into the future, has fallen to its weakest point in six years.
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The Australian economy has become collateral damage in the worldwide credit crunch but will hold up, federal Finance Minister Lindsay Tanner says.

He made his comments as US Treasury Secretary Henry Paulson and leading politicians said they had made great progress on a plan to bail out Wall Street.

“We can’t predict the medium-term impacts of the US financial crisis,” Mr Tanner told the Nine Network today.
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The global financial system edged towards a full scale meltdown this week, and anyone who thinks the danger is over would be sorely mistaken. It’s been a wild ride this past week.

And Australia - despite being better positioned than many other countries to weather the turmoil - has not been unaffected.

It all began with another manic Monday, as the 158-year-old investment bank, Lehman Brothers, joined the growing casualty list of companies sunk by the credit crisis.

Under the weight of $US60 billion ($A73.24 billion) in bad debt, stemming from the collapse of the US sub-prime mortgage sector, Lehman on Monday filed for bankruptcy.

It is the largest corporate bankruptcy case in US history.
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Former federal treasurer Peter Costello’s comments that the Labor government is responsible for Australia’s economic plight are “remarkable” considering how he left the country, Prime Minister Kevin Rudd says.

Mr Rudd today said he found the comments “remarkable” considering Mr Costello had overseen a rise in interest rates and inflation.

“I think Mr Costello should reflect on the conditions he left this Australian economy in as of November last year,” Mr Rudd told reporters in Brisbane.
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Prime Minister Kevin Rudd says the opposition’s decision to block various measures contained in the May budget could put at risk the government’s ability to meet the various challenges facing the economy.

Mr Rudd said today the economy faced numerous challenges as a result of various global factors such as the credit crunch and rising oil prices.
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Australian economic growth will slow in 2008 as the global economy struggles against the credit crunch and high inflation, a survey finds.
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The International Monetary Fund’s latest economic outlook highlights the difficult circumstances Australia faces, federal Treasurer Wayne Swan says.
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