Australia’s central bank held its cash rate steady at a record low of 2.5 percent yesterday and hinted at a prolonged pause, saying a period of interest rate stability was prudent as the mining boom unwinds.
Reserve Bank of Australia (RBA) Governor Glenn Stevens said the board had decided to leave interest rates on hold for a fifth consecutive month, as expected by analysts.
Despite inflation coming in at a stronger-than-expected 0.8 percent in the final three months of last year, indicating a pickup in consumer spending, Stevens said growth and labor market prospects remained shaky as Australia’s decade-long Asia mining investment boom began to decline.
“Information becoming available over the summer suggests slightly firmer consumer demand and foreshadows a solid expansion in housing construction. Some indicators of business conditions and confidence have shown improvement,” he said.
“At the same time, with resources sector investment spending set to decline significantly, considerable structural change occurring and lingering uncertainty in some areas of the business community, near-term prospects for business investment remain subdued,” he said.
Stevens said the RBA expected “growth to remain below trend for a time yet and unemployment to rise further before it peaks.”
“In the board’s judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target,” he said. “On present indications, the most prudent course is likely to be a period of stability in interest rates.”
The nation’s mining-driven economy expanded a modest 0.6 percent in the three months to September and 2.3 percent year-on-year, with the government describing it as “stuck in second gear” as it transitions to non-resources sector drivers of growth.
Unemployment is 5.8 percent, with the economy shedding 22,600 jobs in December.
The Australian dollar rose to US$0.8807 from US$0.8761 immediately prior to the decision, with investors welcoming the RBA’s more neutral tone.
“RBA appears to have moved to a neutral bias by referring to a period of stability in rates,” AMP Capital chief economist Shane Oliver said.
“Our view remains [that rates will be] on hold at least out to September,” he added.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by