Bad news from our Reserve Bank

The Reserve Bank of Australia Governor Glenn Stevens has warned business that there will be tougher borrowing conditions in the next few months.

In a speech yesterday to the Asia Society, Stevens warned that borrowers were now less willing to approve new loans due to the uncertainty about the extent of the problems in the US.

“We may well observe a further tightening of financial conditions in the months ahead,” he said.

However he did note that Australia was in a better position to ride out the sub-prime crisis.

Meanwhile in Britain, the Bank of England will bail out Northern Rock, which has seen nearly $US4 billion withdrawn by desperate customers.

And former US Federal Reserve chairman Alan Greenspan put the odds of a US recession at greater than one in three – though this was before the cut to US interest rates was announced overnight.