RBA’s Kent: A weaker AUD to act as a buffer in response to negative developments in external conditions

RBA’s assistant governor Christopher Kent is now crossed the wires via Reuters, noting the impact of Chinese economic slowdown on the Australian economy, while commenting on the AUD level.

Key Quotes:

 Our central forecast is China will see further gradual moderation in growth over next few years

Chinese policy so far has tended towards more accommodative policy settings, may raise risk of future disruptive adjustment

We should be alert to the risk of adverse developments that could lead to a sharp economic slowdown in China

Chinese authorities are attentive to these risks and have the scope to respond if needed

For Australia, primary risk posed by the uncertain outlook in China is to commodity prices and exports

A weaker AUD in response to negative developments in external conditions could be expected to act as a buffer

Longer term, lots of room for further development in Chinese economy, which will provide Australia with many opportunities