Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


RBA cuts key rate to 3 percent on subdued economic outlook

RBA cuts key rate to 3 percent on subdued labour market, below average global growth

Dec. 4 (BusinessDesk) – The Reserve Bank of Australia cut its key rate a quarter point as expected, saying there’s a risk below-average global growth slows further while at home the labour market is subdued and capital spending on resources is peaking.

The central bank lowered the cash rate to 3 percent from 3.25 percent to “help to foster sustainable growth in demand and inflation outcomes consistent with the target over time.”

The Australian dollar rose immediately after the announcement to US$1.0446 fr9om US$1.0417, while the New Zealand dollar rose to US82.29 cents, from 82.04 cents just before the RBA decision was announced.

Risks to the outlook for global growth “are still seen to the downside, largely as a result of the situation in Europe, though the uncertainty over the course of US fiscal policy is also weighing on sentiment at present,” governor Glenn Stevens said in a statement.

That’s the first time he’s made mention of the US fiscal position since his August 2 statement last year, when the US Congress stalled on agreeing to lift the debt ceiling and America’s credit rating got downgraded. Republicans and the White House are again at odds as the deadline looms for the fiscal cliff, which could stall the world’s biggest economy.

In Australia, most indicators suggest economic growth is running close to trend, with large increases in capital spending in the resources sector and “weaker conditions” in other sectors.

“Looking ahead, recent data confirm that the peak in resource investment is approaching,” Stevens said.

While private consumption is expected to grow, a return to the very strong growth of some years ago is unlikely, he said. Investment outside the resources sector remains relatively subdued and public spending is forecast to be constrained.

Stevens did note signs of improvement in the property market, with home prices rising, rental yields rising and an increase in building approvals.

Inflation is consistent with the bank’s medium-term target, at around 2.5 percent on an underlying basis, though headline inflation may briefly rise above 3 percent, partly as a result of the introduction of a carbon tax, Stevens said.

“Looking further ahead, with the labour market softening somewhat and unemployment edging higher, conditions are working to contain pressure on labour costs,” he said.

While monetary policy has become “more accommodative” over the past year, as the bank lowered the cash rate, the Australian dollar “remains higher than might have been expected, given the observed decline in export prices and the weaker global outlook,” he said.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Power Outages, Roads Close: Easter Storm Moving Down Country

The NZ Transport Agency says storm conditions at the start of the Easter break are making driving hazardous in Auckland and Northland and it advises people extreme care is needed on the regions’ state highways and roads... More>>

ALSO:

Houses (& Tobacco) Lead Inflation: CPI Up 0.3% In March Quarter

The consumers price index (CPI) rose 0.3 percent in the March 2014 quarter, Statistics New Zealand said today. Higher tobacco and housing prices were partly countered by seasonally cheaper international air fares, vegetables, and package holidays. More>>

ALSO:

Notoriously Reliable Predictions: Budget To Show Rise In Full-Time Income To 2018: English

This year’s Budget will forecast wage increases through to 2018 amounting to a $10,500 a year increase in average full time earnings over six years to $62,200 a year, says Finance Minister Bill English in a speech urging voters not to “put all of this at risk” by changing the government. More>>

ALSO:

Prices Up, Volume Down: March NZ House Sales Drop 10% As Loan Curbs Bite

New Zealand house sales dropped 10 percent in March from a year earlier as the Reserve Bank’s restrictions on low-equity mortgages continue to weigh on sales of cheaper property. More>>

ALSO:

Scoop Business: Chorus To Appeal Copper Pricing Judgment

Chorus will appeal a High Court ruling upholding the Commerce Commission’s determination setting the regulated prices on the telecommunications network operator’s copper lines. More>>

ALSO:

Earlier:

Cars: Precautionary Recalls Announced For Toyota Vehicles

Toyota advises that a number of its New Zealand vehicles are affected by a series of precautionary global recalls. Toyota New Zealand General Manager Customer Services Spencer Morris stressed that the recalls are precautionary. More>>

ALSO:

'Gardening Club': Air Freight Cartel Nets Almost $12 Million In Penalties

The High Court in Auckland has today ordered Swiss company Kuehne + Nagel International AG to pay a penalty of $3.1 million plus costs for breaches of the Commerce Act. Kuehne + Nagel’s penalty brings the total penalties ordered in this case to $11.95 million ... More>>

ALSO:

Crown Accounts: Revenue Below Projections

Core Crown tax revenue has increased by $1.9 billion (or 5.0%) compared to the same time last year. However this was $1.1 billion less than expected and is reflected across most tax types, continuing the pattern of recent months. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news