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Mining investment close to peaking: RBA
Mining investment close to peaking: RBA

The record level of investment in the mining sector is close to peaking, Reserve Bank governor Glenn Stevens has warned, although there were positive signs for the entire economy.

Giving evidence to a House of Representatives committee, Mr Stevens said while this peak would be met soon that did not mean it would fall away quickly.

"It appears that the peak in the level of resource sector investment is now close," he said.

"It is a very high peak, but we do not think that there will be a rapid decline in the near term after the peak. However, it seems pretty clear that this type of investment will not be adding to demand for much longer."

Mr Stevens played down long standing claims of a collapse in consumer confidence, saying actual measures of confidence had been on an upward trend since the middle of last year.

They were now above their long term averages but were not likely to return to the "ebullience" seen before the advent of the Global Financial Crisis.

The deep cuts in interest rates delivered by the bank were starting to work through the economy, he said.

The biggest beneficiaries were those looking to buy a home.

"The share of household income devoted to interest payments has likewise declined considerably," he said.

"Indeed housing 'affordability' as conventionally measured, for purchasers, has improved a lot over the past two years."

Mr Stevens gave no signs the bank was keen to cut interest rates any further from their current equal 60-year low of 3 per cent.

The strong dollar, however, was a key factor in the bank's thinking about rates.

"The exchange rate remains somewhat higher than one might have expected given the decline in export prices so far observed," he said.

"This has been a relevant factor in the setting of interest rates. It is not that interest rates are seeking a particular exchange rate response, but they are being set with a recognition of the exchange rate's effect on the economy."