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

 

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

NASA, NOAA: Find 2014 Warmest Year In Modern Record

Since 1880, Earth’s average surface temperature has warmed by about 1.4 degrees Fahrenheit (0.8 degrees Celsius), a trend that is largely driven by the increase in carbon dioxide and other human emissions into the planet’s atmosphere. The majority of that warming has occurred in the past three decades. More>>

ALSO:

Scoop Business: New Zealand’s Reserve Bank Named Central Bank Of The Year

The Reserve Bank of New Zealand’s efforts to stifle house price inflation by using new policy tools has seen the institution named Central Bank of the year by Central Banking Publications, a publisher specialising in global central banking practice. More>>

ALSO:

Science Media Centre: Viral Science And Another 'Big Dry'?

"Potentially, if there is no significant rainfall for the next month or so, we could be heading into one of the worst nation-wide droughts we’ve seen for some time," warns NIWA principal climate scientist Dr Andrew Tait. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news