| The Reserve Bank believes Australia’s export commodity prices are on a permanent high and in little danger of dropping back to pre-resource boom lows. The head of the bank’s economic division, Christopher Kent, says world demand for resources has expanded so much that it can no longer be satisfied just by low-cost producers.
The bank’s index of commodity prices has fallen by about 50 per cent from its peak, but is still almost 80 per cent above early 2000 levels. “Commodity prices remain relatively high,” he told a conference in Sydney yesterday. The immediate future for commodity prices would be dictated by conditions in industry in China and across Asia. The shift in China’s economy from investment to consumption-led growth made it unlikely prices would rise from current levels...............................................Full Article: Source
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