Aus­tralia’s cen­tral bank hints at fur­ther rate cuts

The Pak Banker - - Front Page -

SYDNEY

Aus­tralia’s cen­tral bank Tues­day said fur­ther in­ter­est rate cuts were pos­si­ble, but stood by its de­ci­sion ear­lier this month to leave them on hold, cit­ing re­cent im­proved data on the global econ­omy.

The Re­serve Bank of Aus­tralia (RBA) last cut its of­fi­cial cash rate by 25 ba­sis points in Oc­to­ber to 3.25 per­cent, a low not seen since late 2009 when it first re­sumed hik­ing them af­ter the global fi­nan­cial cri­sis. “Mem­bers con­sid­ered that fur­ther eas­ing may be ap­pro­pri­ate in the pe­riod ahead,” the RBA said in the min­utes of its Novem­ber 6 meet­ing re­leased Tues­day.

“How­ever, with prices data for the Septem­ber quar­ter slightly higher than expected and re­cent in­for­ma­tion on the world econ­omy slightly more pos­i­tive, the board judged that the stance of mone­tary pol­icy was ap­pro­pri­ate for the time be­ing.” The RBA has cut 100 ba­sis points from the rate throughout 2012 and said these were still work­ing their way through the econ­omy. On the global econ­omy, the cen­tral bank said re­cent news was “some­what more pos­i­tive” than it had been. The bank pointed to im­prove­ments in China af­ter var­i­ous stim­u­lus mea­sures, while the US was show­ing mod­er­ate growth, adding that a so­lu­tion to the fis­cal cliff of tax hikes and spend­ing cuts “could re­sult in bet­ter growth prospects”.

In Europe it said re­cent pol­icy an­nounce­ments had helped to bol­ster fi­nan­cial mar­ket con­di­tions, though eco­nomic ac­tiv­ity there re­mained weak. Do­mes­ti­cally, in­fla­tion in the Septem­ber quar­ter was a lit­tle higher than expected, with the un­der­ly­ing fig­ure about 2.5 per­cent over the year, while un­em­ploy­ment was up slightly in Septem­ber at 5.4 per­cent.

“Over­all, growth of the Aus­tralian econ­omy had slowed from an above- trend pace ear­lier in the year, with re­cent in­di­ca­tors of ac­tiv­ity sug­gest­ing that eco­nomic growth was more mod­er­ate in the Septem­ber quar­ter,” it said. Last month the gov­ern­ment cut its real eco­nomic growth fore­cast— from 3.25 per­cent to 3.0 per­cent— as weaker global con­di­tions hurt rev­enues in the min­ing­driven econ­omy.

“How­ever, with prices data for the Septem­ber quar­ter slightly higher than expected and re­cent in­for­ma­tion on the world econ­omy slightly more pos­i­tive, the board judged that the stance of mone­tary pol­icy was ap­pro­pri­ate for the time be­ing.” The RBA has cut 100 ba­sis points from the rate throughout 2012 and said these were still work­ing their way through the econ­omy. On the global econ­omy, the cen­tral bank said re­cent news was “some­what more pos­i­tive” than it had been.

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