FED: RBA says world deflation unlikely

AAP General News (Australia)
12-15-1998
FED: RBA says world deflation unlikely

CANBERRA, Dec 15 AAP - The Asian economic crisis was unlikely to lead to world deflation,
the Reserve Bank of Australia said today.

RBA Deputy Governor Stephen Grenville said the world learned a valuable lesson from the
depression of the 1930s.

"I think its unlikely the world is getting into deflation," Dr Grenville told a
parliamentary committee.

"When you compare this say with the 1930s, we did learn something from the 30s. I dont
think its a worldwide phenomenon.

"These are policy mistakes, and its possible that policy all around the world will get it
wrong, or policy in all the big countries will get it wrong. But Id have to say I think
thats unlikely.

"Its not like the 1930s, I dont think thats the analysis," he said.

Dr Grenville said South Korea had hit a trough and now had the prospect of moving forward
next year.

But Indonesia remained a problem.

"At the other end of the spectrum is Indonesia, where there isnt really a clear definition
of a trough or a stability situation reached, because thats now interacted with all sorts of
political elements as well," Dr Grenville said.

"And then in between those youve got countries like Thailand."

AAP jg/rsm/br

KEYWORD: ECONOMY RBA ASIA

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