SYDNEY, Aug 28, 2007 (AFP) – There are signs that the credit squeeze which rocked global markets recently is easing both in Australia and overseas, the deputy governor of Australia’s central bank said Tuesday. The Reserve Bank of Australia’s Ric Battellino said the steps taken by the central bank to ease upward pressure on interest rates had helped stabilise market conditions somewhat.
“In recent days, there have been some encouraging signs of improvement in markets, both here in Australia and overseas,” Battellino said in a speech at a finance conference.
The central bank has been injecting extra cash into Australia’s banking system since August 10, when problems in US subprime mortgages spilled over into money markets, affecting liquidity.
“The bank will continue to monitor the situation carefully. If market developments warrant, the bank has scope to further expand the provision of liquidity,” Battellino said.
The RBA’s measures, and those from other central banks, should not be seen as an attempt to bail out the markets, he said.
“The measures have been technical operations aimed at breaking up the log jams in money markets and encouraging funds to flow again, in order to prevent m