Recession unlikely, RBA boss tells student

INTEREST rates have risen far enough to bring inflation back below the Reserve Bank's target, RBA governor Glenn Stevens says.

IT took a schoolgirl one question to elicit what a committee of 10 MPs could not during a three-hour grilling - a definitive statement on the "R" word from Australia's Reserve Bank governor.

"Recession? I don't think we are going to have one any time soon," Glenn Stevens said in response to a direct question from Year 12 economics student Caroline Nguyen at the end of his public testimony to a parliamentary economics committee in Sydney.

As Mr Stevens remarked earlier, recession is the word on everyone's lips these days.

But Ms Nguyen, introducing herself as a "possible future Reserve Bank governor", dared to go where MPs apparently feared to tread.

She was the only person to ask about a possible recession when she fired off the last of four questions the committee allowed today from students.

She attends Caringbah High in Sydney's south, the same school as the RBA governor's daughter Natalie, who might well have been asking her dad a question if she studied economics.

But she does not, and was not at today's hearing.

"She probably gets too much of it at home," laughed one of her schoolmates.

Mr Stevens said containing inflation was the key to avoiding recession.

"I think we will be able to (contain inflation), and if that turns out to be right, then we can sustain growth further into the future," the RBA governor told his teenage interlocutor.

Mr Stevens' American counterpart, Federal Reserve Chairman Ben Bernanke, was asked the same "R" question at a congressional hearing this week, and replied only that it was "possible" the US may slip into recession.

But Australia's top central banker wasn't so concerned about semantics, saying that regardless of the technical definition - two successive quarters of negative economic growth - the US was "close enough" not to matter.

"It's certainly feeling like a recession, even if it isn't one," he said. "That's the important thing."

Mr Stevens told the committee he could not promise that interest rates would not rise again, following a string of 12 successive increases since 2002.