Investing.com - Reserve Bank of Australia Governor Glenn Stevens warned that terms of trade are declining, down more than a third, and may fall further following an extraordinary rise in recent years.
"But even at those reduced prices iron ore is still bringing a price 60% more than it did in 2000. Natural-gas prices are 50% or more above their 2000 level. The terms of trade, though down a long way from the peak, are still nearly 30% higher than their 20th century average," Stevens said.
"Of course they may yet fall further. Time will tell," Stevens said.
Meanwhile, he said, interest rates are very low but "there's more we can do on that front" if needed, Stevens said at a discussion after his speech. Internationally there is too much reliance on monetary policy to lift growth and other tools could be used, he said.
Inflation is consistent with the target over the next two to three years and there has been a strong sequence of employment data, he said.