World growing despite subprime crisis says Aussie CB after raising inflation forecast

SYDNEY, Aug 13, 2007 (AFP) – Australia’s central bank Monday said it saw global growth as strong despite the uncertainty created by the crisis in the US home loan market. The Reserve Bank of Australia (RBA) said rising delinquency rates in the US sub-prime housing market had resulted in a marked increase in volatility in financial markets around the world.

“The extent to which these financial events might affect global growth remains uncertain,” the bank said in a quarterly statement.

“At this stage, however, the evidence continues to point to strong growth in the global economy overall.

“While there has been a slowing in the United States, this has so far been largely confined to the housing sector, with the wider economy still growing at a reasonable pace.”

Last week Australia’s central bank was one of several around the world to pump more money into the banking system to try to calm lenders’ concerns stemming from problems in the US subprime mortgage market.

The bank Monday said the biggest risk from the crisis was the possibility of an excessive withdrawal of the provision of credit, which could constrain growth in spending and output, particu