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

 


RBA keeps key rate at 3%, sees scope for future cut

Australia’s central bank keeps key rate at 3%, sees scope for cut

Feb. 5 (BusinessDesk) – The Reserve Bank of Australia kept its cash rate unchanged at 3 percent as expected and said it sees room to cut interest rates if needed as inflation remains low.

“With inflation likely to be consistent with the target, and with growth likely to be a little below trend over the coming year, an accommodative stance of monetary policy is appropriate,” Governor Glenn Stevens said in a statement. “The inflation outlook, as assessed at present, would afford scope to ease policy further, should that be necessary to support demand.”

The Australian dollar fell to US$1.0397 at 5pm in Wellington from US$1.0437 immediately before the statement was released. Traders see 36 basis points of rate cuts by the RBA over the next 12 months and the statement today helps reinforce that view.

Stevens said the Australian economy is still to feel the full impact of monetary easing through 2012 though there are already signs that the interest rate cuts are starting to bite, including early indications of a pickup in home building, rising house prices and increased demand for some consumer durables.

Inflation is consistent with the bank’s medium term target, with both headline and underlying measures at about 2.25 percent, he said. The Australian dollar was “higher than might have been expected” given falling export prices and low demand for credit, he said.

A softening labour market and rising unemployment are helping keep a lid on wage inflation, he said.

The near-term outlook for investment outside of the resources sector remains “relatively subdued.” In the resources sector itself, the peak in investment is nearing, he said, reiterating the view of previous statements.

Globally, growth is forecast to remain below average for some time though the downside risks are abating – the US has avoided a severe fiscal contraction and financial strains in Europe have “lessened considerably over recent months.” Growth in China “has stabilised at a fairly robust pace,” he said.

Sentiment in financial markets has improved and high-rated sovereigns such as Australia face long-term interest rates at exceptionally low levels, he said.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Tourism: China Southern Airlines To Fly To Christchurch

China Southern Airlines, in partnership with Christchurch Airport and the South Island tourism industry, has announced today it will begin flying directly between Guangzhou, Mainland China and the South Island. More>>

ALSO:

Dodgy: Truck Shops Come Under Scrutiny

Mobile traders, or truck shops, target poorer communities, particularly in Auckland, with non-compliant contracts, steep prices and often lower-quality goods than can be bought at ordinary shops, a Commerce Commission investigation has found. More>>

ALSO:

Auckland Transport: Government, Council Agree On Funding Approach

The government and Auckland Council have reached a detente over transport funding, establishing a one-year, collaborative timetable for decisions on funding for the city's transport infrastructure growth in the next 30 years after the government refused to fund the $2 billion of short and medium-term plans outlined in Auckland's draft Unitary Plan. More>>

ALSO:

Bullish On China Shock: Slumping Equities, Commodities May Continue, But Not A GFC

The biggest selloff in stock markets in at least four years, slumping commodity prices and a surge in Wall Street's fear gauge don't mean the world economy is heading for another global financial crisis, fund managers say. More>>

ALSO:

Real Estate: Investors Driving Up Auckland Housing Risk - RBNZ

The growing presence of investors in Auckland's property market is increasing the risks, and is likely to both amplify the housing cycle and worsen the potential damage from a downturn both to the financial system and the broader economy, said Reserve Bank deputy governor Grant Spencer. More>>

ALSO:

Annual Record: Overseas Visitors Hit 3 Million Milestone

Visitor arrivals to New Zealand surpassed 3 million for the first time in the July 2015 year, Statistics New Zealand said today. The record-breaking 3,002,982 visitors this year was 7 percent higher than the July 2014 year. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news