Australia’s central bank slashed its official interest rate by a larger-than-expected 75 basis points yesterday, cutting it to 5.25 percent amid concerns that a slowdown in China will hurt exports.
The Reserve Bank of Australia (RBA), which has now cut rates by 2 percent since September, said the aggressive reduction in the cash rate was warranted given the current global and domestic financial climate.
With Australian economic forecasts gloomy and some western economies headed into a recession, it said that world financial markets remained turbulent and share markets volatile while the Australia dollar had also tumbled.
RBA Governor Glenn Stevens also highlighted concerns about a slowdown in China and the knock-on effect this could have for export commodity prices and therefore the Australian economy.
International economic data have continued to point to significant weakness in the major industrial economies, and there have been further signs that China and other parts of the developing world are slowing as well, he said.
These conditions have contributed to further falls in world commodity prices.
Market forecasts had been for the RBA to deliver a cut of 50 basis points following a sharp and unexpected one percent reduction last month designed to counter the effects of the global financial crisis.
Economists said the bank would likely cut interest rates again before the end of the year, as it sheds the tightening stance designed to curb inflation which saw rates hit a 12-year high of 7.25 percent in March.
It seems like they’re panicking with what’s happening in global growth and its implications for the Australian economy, Tom Kenny, economist at Nomura, told Dow Jones Newswires.
Stephen Halmarick, chief economist at Citigroup, forecast the official cash rate could drop to 4 percent by early next year.
The focus of this statement is on deteriorating international conditions and falling commodity prices — that’s really what’s got them moving aggressively, he said.
The Australian stock market rallied on the cut.
The Central Weather Administration (CWA) yesterday said it expected to issue a sea warning for Typhoon Fung-Wong tomorrow, which it said would possibly make landfall near central Taiwan. As of 2am yesterday, Fung-Wong was about 1,760km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point, moving west-northwest at 26kph. It is forecast to reach Luzon in the northern Philippines by tomorrow, the CWA said. After entering the South China Sea, Typhoon Fung-Wong is likely to turn northward toward Taiwan, CWA forecaster Chang Chun-yao (張峻堯) said, adding that it would likely make landfall near central Taiwan. The CWA expects to issue a land
The Central Weather Administration (CWA) yesterday said it is expected to issue a sea warning for Typhoon Fung-wong this afternoon and a land warning tomorrow. As of 1pm, the storm was about 1,070km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point, and was moving west-northwest at 28 to 32kph, according to CWA data. The storm had a radius of 250km, with maximum sustained winds of 173kph and gusts reaching 209kph, the CWA added. The storm is forecast to pass near Luzon in the Philippines before entering the South China Sea and potentially turning northward toward Taiwan, the CWA said. CWA forecaster Chang Chun-yao (張峻堯) said
PREPARATION: Ferry lines and flights were canceled ahead of only the second storm to hit the nation in November, while many areas canceled classes and work Authorities yesterday evacuated more than 3,000 people ahead of approaching Tropical Storm Fung-wong, which is expected to make landfall between Kaohsiung and Pingtung County this evening. Fung-wong was yesterday morning downgraded from a typhoon to a tropical storm as it approached the nation’s southwest coast, the Central Weather Administration (CWA) said, as it issued a land alert for the storm. The alert applies to residents in Tainan, Kaohsiung, Pingtung and Taitung counties, and the Hengchun Peninsula (恆春). As of press time last night, Taichung, Tainan, Kaohsiung, and Yilan, Miaoli, Changhua, Yunlin, Pingtung and Penghu counties, as well as Chiayi city and county had
The Central Weather Administration (CWA) yesterday issued a sea alert for Typhoon Fung-wong (鳳凰) as it threatened vessels operating in waters off the Pratas Islands (Dongsha Islands, 東沙群島), the Bashi Channel and south of the Taiwan Strait. A land alert is expected to be announced some time between late last night and early this morning, the CWA said. As of press time last night, Taoyuan, as well as Yilan, Hualien and Penghu counties had declared today a typhoon day, canceling work and classes. Except for a few select districts in Taipei and New Taipei City, all other areas and city
RSS