Australian central bank governor suggests room for rate cut

Australia's central bank governor on Tuesday signaled that there is room to cut the official cash rate below 2.75 percent to improve the Australian economy. Glenn Stevens, governor of the Reserve Bank of Australia, the country's central bank, said monetary policy must reflect the pressure being felt in the economy. "We have been saying recently that the inflation outlook may afford some scope to ease policy further if needed to support demand," he said while addressing to a business luncheon in Sydney. Stevens said the recent inflation data do not appear to have shifted that assessment. The Australian dollar dropped more than a cent against the U.S. dollar after the comments, and was trading at 90.93 U.S. cents at 1:35 p.m. (local time). Stevens said the mining boom is shifting gear and Australia is entering a new phase. "We would like to see a 'rotation' to other sorts of demand as the resources sector demand slows," he said. "The 'post boom' growth story of the economy would desirably involve stronger expansion in some other sectors, including those that have seen weaker than normal conditions in the past couple of years." said Stevens.