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

 

Scoop Business: RBNZ Keeps OCR At 3.5%, Signals Slower Pace Of Future Hikes

Reserve Bank governor Graeme Wheeler kept the official cash rate at 3.5 percent and signalled he won’t be as aggressive with future rate hikes as previously thought as inflation remains tamer than expected. The kiwi dollar fell to a seven-month low. More>>

ALSO:

Weather: Dry Spells Take Hold In South Island

Many areas in the South Island are tracking towards record dry spells as relatively warm, dry weather that began in mid-August continues... for some South Island places, the current period of fine weather is quite rare. More>>

ALSO:

Scoop Business: Productivity Commission To Look At Housing Land Supply

The Productivity Commission is to expand on its housing affordability report with an investigation into improving land supply and development capacity, particularly in areas with strong population growth. More>>

ALSO:

Forestry: Man Charged After 2013 Death

Levin Police have arrested and charged a man with manslaughter in relation to the death of Lincoln Kidd who was killed during a tree felling operation on 19 December 2013. More>>

ALSO:

Smells Like Justice: Dairy Company Fined Over Odour

Dairy company fined over odour Dairy supply company Open Country Dairy Limited has been convicted and fined more than $35,000 for discharging objectionable odour from its Waharoa factory at the time of last year’s ”spring flush” when milk supply was high. More>>

Scoop Business: Dairy Product Prices Decline To Lowest Since July 2012

Dairy product prices dropped to the lowest level since July 2012 in the latest GlobalDairyTrade auction, led by a slump in rennet casein and butter milk powder. More>>

ALSO:

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news