Indeed, the on-going financial market turbulence that began last August is a timely reminder of both the interconnected world we live in, and how quickly events can unfold. What began as difficulties in the US housing sector and the associated securitisation of mortgage-backed financial products, has developed into a re-pricing of risk more generally, increased global financial market volatility and tighter credit conditions.
Since the December Monetary Policy Statement there has been ongoing turbulence in international financial markets and a deterioration in the outlook for the United States and European economies. We will be watching these developments closely, particularly their implications for the Asian and Australian economies and for world commodity prices.