CommSec issues economic warning

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By Robert Carry

The Australian economy may not yet be ready for the cancellation of stimulus spending or for the Reserve Bank of Australia (RBA) to return rates towards normal levels, according to securities firm CommSec.
"With economic recovery in its infancy, policymakers must not get complacent and withdraw stimulus too quickly," said a statement from the group.

CommSe'sc Recession Warning Gauge - a measure of manufacturing activity - showed that the Australian economy is still at risk.

Current indications suggest that the economy was flat or may have even have fallen slightly in the September quarter.

The firm's statement continued, "CommSec believes that the Government is right to be cautious about removing stimulus to the economy. Further, we believe that the Reserve Bank needs to tread carefully in lifting rates to more normal levels."

CommSec said its actual forecast at present is 0.1% for the quarter. There was some good news from the group however with the statement pointing out, "The indicators released over October and November provide us with far more confidence about the future, but Australian consumers and businesses must be warned about complacency."

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