Fed Reserve’s Janet Yellen patient while RBA governor Glenn Stevens sweats

Here’s the kicker. Stevens also referred to the Board’s ability to cut interest rates again, if necessary, during a speech to a parliamentary committee.

RBA governor Glenn Stevens says other inflationary pressures such as wages are relatively low and that only a “very, very large fall” in the exchange rate would push up inflation.

Recent weakness in China’s economic growth and the plunge in its share market are being watched by the RBA.

The U.S. central bank will have concluded its crucial two-day meeting just hours before Mr Stevens fronts the House of Representatives economics committee for the three-hour hearing on Friday morning.

Mr Stevens said the flow of new lending to investors is not continuing to increase the way it was, and the rate of growth will gradually come back to the regulator’s 10 per cent “speed limit”.

Mr Stevens warned that upcoming interest rate rises in the United States could have far-reaching effects, but acknowledged that it would sooner or later have to happen. There is a degree of irreducible uncertainty here and hence the possibility of further financial market volatility at some point.

“Some fretting about the first increase in USA interest rates for nine years is to be expected, no matter how well telegraphed it has been”, he said.

“It’s that slope of that Federal funds rate into the future, or the anticipated slope, that will potentially affect financial markets”.

For us, for some time the question has really been, is this interest rate appropriate to promote growth without running undue risks in the financial space?

The USA would be a key factor for the global economy, and it continues to show signs of improvement, he said.