Australia in recession

Australia's central bank chief said the country has followed the rest of the world into a recession.

However, Reserve Bank Governor Glenn Stevens emphasised today that "sensible" policies remained in place and that the government had not been forced to bailout the banking sector.

Mr Stevens' comments come a day after Prime Minister Kevin Rudd said it was inevitable that Australia would slip into a recession.

A recession is defined as two consecutive quarters of negative economic growth. Australia's economy shrank 0.5% in the last quarter of 2008 - the economy's first contraction in eight years.

Mr Stevens said this would be Australia's eighth recession since World War II, and most were linked to international business cycles.