Australia’s central bank cut its benchmark interest rate by one-quarter of a percentage point to a record-low 2.5 percent yesterday because of slower growth and weakening commodity prices.
The Reserve Bank of Australia’s decision was made at a monthly board meeting in the first week of a federal election campaign and was expected by most economists.
The bank last cut the Official Cash Rate, which is a benchmark for commercial lending rates, by one-quarter of a point in May, following four cuts last year.
Photo: Reuters
In a statement, Reserve Bank of Australia Governor Glenn Stevens said economic growth was below the long-term trend level of 3 percent, as the economy adjusts to lower levels of mining investment, but added that there was a “reasonable prospect” of it picking up next year.
Australia has enjoyed a decade-long boom in mining and related construction that helped it avoid recession during the global financial crisis. However, growth is now slowing as China’s economy cools and drags down prices for commodities such as iron ore and coal.
The Australian government last week nearly doubled its budget deficit forecast for the fiscal year through June next year to A$30.1 billion (US$26.8 billion), as slowing growth weighs on tax revenues.
Stevens said the Aussie dollar was still quite high despite falling by 15 percent since April. The Australian currency was little changed at just below US$0.90 immediately after the rate announcement.
“It is possible that the exchange rate will depreciate further over time, which would help to foster a rebalancing of growth in the economy,” he said.
Canberra last week downgraded its growth forecast for the current fiscal year beginning on July 1 from 2.75 percent to 2.5 percent.
The 2.5 percent policy rate is the lowest since the central bank’s inception in 1960.
Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) came under pressure yesterday after a report that Apple Inc is looking to shift some orders from the Taiwanese company to Intel Corp. TSMC shares fell NT$55, or 2.4 percent, to close at NT$2,235 on the local main board, Taiwan Stock Exchange data showed. Despite the losses, TSMC is expected to continue to benefit from sound fundamentals, as it maintains a lead over its peers in high-end process development, analysts said. “The selling was a knee-jerk reaction to an Intel-Apple report over the weekend,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to remain Apple Inc’s primary chip manufacturing partner despite reports that Apple could shift some orders to Intel Corp, industry experts said yesterday. The comments came after The Wall Street Journal reported on Friday that Apple and Intel had reached a preliminary agreement following more than a year of negotiations for Intel to manufacture some chips for Apple devices. Taiwan Institute of Economic Research (台灣經濟研究院) economist Arisa Liu (劉佩真) said TSMC’s advanced packaging technologies, including integrated fan-out and chip-on-wafer-on-substrate, remain critical to the performance of Apple’s A-series and M-series chips. She said Intel and Samsung
TRANSITION: With the closure, the company would reorganize its Taiwanese unit to a sales and service-focused model, Bridgestone said Bridgestone Corp yesterday announced it would cease manufacturing operations at its tire plant in Hsinchu County’s Hukou Township (湖口), affecting more than 500 workers. Bridgestone Taiwan Co (台灣普利司通) said in a statement that the decision was based on the Tokyo-based tire maker’s adjustments to its global operational strategy and long-term market development considerations. The Taiwanese unit would be reorganized as part of the closure, effective yesterday, and all related production activities would be concluded, the statement said. Under the plan, Bridgestone would continue to deepen its presence in the Taiwanese market, while transitioning to a sales and service-focused business model, it added. The Hsinchu
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has approved a capital budget of US$31.28 billion for production expansion to meet long-term development needs during the artificial intelligence (AI) boom. The company’s board meeting yesterday approved the capital appropriation plan for purposes such as the installation of advanced technology capacity and fab construction, the world’s largest contract chipmaker said in a statement. At an earnings conference last month, TSMC forecast that its capital expenditure for this year would be at the higher end of the US$52 billion to US$56 billion range it forecast in January in response to robust demand for 5G, AI and
RSS