The gloomy state of global economy appears to be easing down on Australia's inflation figures, according to Reserve Bank of Australia (RBA) governor Glenn Steven, but he warned that upheavals are still ahead and they can significantly upset the domestic economy.

Appearing Friday morning before the House Standing Committee on Economics in Melbourne, the RBA boss stressed that the country's inflation figures should be monitored closely "but we can keep it under control."

"There is a heightened degree of uncertainty at present. There are major challenges in the global economy and significant forces at work in the Australian economy," Stevens was quoted by The Australian as saying.

Compared to the economic picture at the onset of the current year, Stevens noted that the prospect of growth in the international arena seemed stalling and "think there is still a bit of angst out there in international financial markets."

"That's partly the ongoing issues in Europe, how are they going to resolve these matters, and they are very, very difficult matters," the central bank chief was quoted by Reuters as saying, as he added that any proposed resolution at this point hinges on the policy speech that US Federal Reserve chairman Ben Bernanke will deliver by the end of the week.

At any rate, Stevens is convinced that the Eurozone is still gripped with uncertainties and the likelihood of slides in the months ahead could not be ruled out, mostly because of the instability emitted by the debt and financial crises in Europe and the United States.

While the picture is grim in Europe, which Stevens said should be in effect for a could of years to come, Asia, on the other hand, still enjoys growth and stability as the region's major economies "are moving along quite smartly, particularly China."

At the homefront, the RBA chief told the Australian legislators that current spending patterns are spawning a two-way effect on the local economy.

"Consumer caution, while making life hard for the retail sector, is also building resilience in household balance sheets," Stevens was quoted by The Australian Associated Press (AAP) as saying.

He added that the current investment boom presents golden opportunity to both ramp up the country's financial activities and raise its savings threshold as he underscored that having "some saving at home is probably not a bad thing."

Stevens also admitted that production capabilities hit a snag both globally and domestically but he cautioned that Australia seems to be one of the hardest hit and "the slowdown appears to exist in the bulk of the industry sectors," basing on latest economic indicators.

Noting that the existing economic turbulence are too pronounced to be ignored, he hinted that the RBA board may opt to freeze the current cash rate at 4.75 percent, which has been fixed since November last year.

"It is a very good thing I think for policy to just sit still if we can, given that turbulence, rather than to add to it by starting to change our settings," the RBA head was quoted by Reuters as saying.