Australia’s central bank yesterday lifted its main interest rate to 4.5 percent, citing inflation concerns, rising house prices and a booming commodities trade linked to Chinese demand.
Reserve Bank of Australia Governor Glenn Stevens said that the risk of serious economic contraction had passed some time ago, and the bank was now adjusting the interest rate toward more average levels.
“The board expects that, as a result of today’s decision, rates for most borrowers will be around average levels,” he said of the widely expected 25 basis point hike — the third in as many months and the sixth since October.
Despite recent debt fears out of Greece, Stevens said world markets were faring well and global growth forecasts had been recently revised upwards.
However, Australian commodity prices were rising faster than expected and looked likely to return to peak levels last seen at the height of the mining boom in 2008, boosting incomes and investment in the resources sector, he said.
“Under these conditions, output growth over the year ahead is likely to exceed that seen last year, even though the effects of earlier expansionary policy measures will be diminishing,” Stevens said.
There was also “considerable buoyancy” in the housing market, he said, with prices continuing to climb over recent months.
According to the Australian Bureau of Statistics, house prices across the country grew by an average 20 percent in the past 12 months.
While underlying inflation had declined owing to slowing private-sector labor costs during the global downturn, Stevens said it was likely to trend in the upper half of the bank’s target range of between 2 and 3 percent.
“The extent of decline from here may not be quite as much as earlier forecast and inflation now appears likely to be in the upper half of the target zone over the coming year,” Stevens said.
Data released last week showed inflation crept up to 2.9 percent year-on-year, with the consumer price index jumping 0.9 percent in the three months to March, led by vegetables, gasoline and electricity.
The central bank’s commodities prices index, released on Monday, showed a 17.6 percent jump last month, with contract and spot prices for iron ore fines increasing 100 percent in the month.
Commonwealth Bank chief economist Michael Blythe said the renewed commodity boom — mainly driven by surging demand caused by China’s voracious appetite for natural resources — underpinned inflationary pressures.
Australian Treasurer Wayne Swan said rate hikes were a “difficult but inevitable consequence” of an economy that was recovering faster than its advanced counterparts.
“Rates could never stay at record lows forever,” Swan said, warning he would hand down a “no frills” annual budget next Tuesday.
“The government has been winding back economic stimulus; what the Reserve Bank has been doing has been returning rates to normal,” he said.
NO RECIPROCITY: Taipei has called for cross-strait group travel to resume fully, but Beijing is only allowing people from its Fujian Province to travel to Matsu, the MAC said The Mainland Affairs Council (MAC) yesterday criticized an announcement by the Chinese Ministry of Culture and Tourism that it would lift a travel ban to Taiwan only for residents of China’s Fujian Province, saying that the policy does not meet the principles of reciprocity and openness. Chinese Deputy Minister of Culture and Tourism Rao Quan (饒權) yesterday morning told a delegation of Chinese Nationalist Party (KMT) lawmakers in a meeting in Beijing that the ministry would first allow Fujian residents to visit Lienchiang County (Matsu), adding that they would be able to travel to Taiwan proper directly once express ferry
STUMPED: KMT and TPP lawmakers approved a resolution to suspend the rate hike, which the government said was unavoidable in view of rising global energy costs The Ministry of Economic Affairs yesterday said it has a mandate to raise electricity prices as planned after the legislature passed a non-binding resolution along partisan lines to freeze rates. Chinese Nationalist Party (KMT) lawmakers proposed the resolution to suspend the price hike, which passed by a 59-50 vote. The Taiwan People’s Party (TPP) voted with the KMT. Legislative Speaker Han Kuo-yu (韓國瑜) of the KMT said the resolution is a mandate for the “immediate suspension of electricity price hikes” and for the Executive Yuan to review its energy policy and propose supplementary measures. A government-organized electricity price evaluation board in March
FAST RELEASE: The council lauded the developer for completing model testing in only four days and releasing a commercial version for use by academia and industry The National Science and Technology Council (NSTC) yesterday released the latest artificial intelligence (AI) language model in traditional Chinese embedded with Taiwanese cultural values. The council launched the Trustworthy AI Dialogue Engine (TAIDE) program in April last year to develop and train traditional Chinese-language models based on LLaMA, the open-source AI language model released by Meta. The program aims to tackle the information bias that is often present in international large-scale language models and take Taiwanese culture and values into consideration, it said. Llama 3-TAIDE-LX-8B-Chat-Alpha1, released yesterday, is the latest large language model in traditional Chinese. It was trained based on Meta’s Llama-3-8B
NOVEL METHODS: The PLA has adopted new approaches and recently conducted three combat readiness drills at night which included aircraft and ships, an official said Taiwan is monitoring China’s People’s Liberation Army (PLA) exercises for changes in their size or pattern as the nation prepares for president-elect William Lai’s (賴清德) inauguration on May 20, National Security Bureau (NSB) Director-General Tsai Ming-yen (蔡明彥) said yesterday. Tsai made the comment at a meeting of the Legislative Yuan’s Foreign Affairs and National Defense Committee, in response to Democratic Progressive Party (DPP) Legislator Wang Ting-yu’s (王定宇) questions. China continues to employ a carrot-and-stick approach, in which it applies pressure with “gray zone” tactics, while attempting to entice Taiwanese with perks, Tsai said. These actions aim to help Beijing look like it has