Australia’s central bank yesterday left interest rates unchanged at 2.25 percent, but gave a clear signal that further easing was on the cards to help drive down the nation’s currency and spur the economy.
The Reserve Bank of Australia last month cut rates for the first time in 18 months, dropping its cash rate by 25 basis points to a historic low of 2.25 percent to help drive growth.
“At today’s meeting, the board judged that, having eased monetary policy at the previous meeting, it was appropriate to hold interest rates steady for the time being,” Reserve Bank of Australia Governor Glenn Stevens said in a statement.
“Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target. The board will further assess the case for such action at forthcoming meetings,” he added.
The wait-and-see approach comes as a decade-long mining investment boom fades, with growth slowing, inflation low and unemployment at a more than 12-year high.
The bank said that commodity prices, such as for major exports iron ore and coal, had slumped in the past year, while growth in key export market China was also slowing.
Australian stocks, which had been edging toward the 6,000-point mark for the first time since 2008 in morning trade in Sydney, fell on the announcement.
Amid fears that a fresh rate cut would inflame an already booming property market, the bank said that housing prices continued to rise strongly in Sydney, but were more varied in other cities.
Balancing this concern, the bank has been keen to see the Australian dollar drop further from its historic highs of recent years.
It yesterday reiterated that the currency was “above most estimates of its fundamental value.”
“A lower exchange rate is likely to be needed to achieve balanced growth in the economy,” it said.
Keeping rates on hold saw the currency rise from US$.07769 to US$.07828.
Greg Gibbs, head of Asia-Pacific markets strategy at the central bank, said the statement gave “unusually clear guidance.... that they are highly likely to cut again.”
“By providing this guidance it appears the [bank] is keen to keep a lid on the Australian dollar,” Gibbs said.
ANZ chief economist Warren Hogan said the central bank’s strong easing bias suggested a cut at the next meeting next month.
“Recent data suggests that more easing may be required beyond April if the economy cannot generate the growth in activity necessary to stabilize the unemployment rate,” he said.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to