Investing.com - Reserve Bank of Australia Governor Glenn Stevens warned Wednesday that the market has "underappreciated" the risk of a weaker Australian dollar and said it would be surprising based on economic fundamentals if the currency maintained current levels.
Stevens made the remarks in testimony to an Australian parliament committee.
Stevens also said that recent monetary policy has "resulted in financial conditions remaining remarkably accommodative. This has been reflected in a decline, at the margin, in interest rates in Australia, even though the Reserve Bank has not changed the cash rate for a year."
He added that the policy stance is working its way through the economy.
The RBA is "allowing time for measures already taken to have their effects, and of the very considerable limitations for monetary policy in fine-tuning economic outcomes over short periods. It has also seen some value, in the present circumstances, in maintaining a sense of steadiness and stability," Stevens said.
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