Australia’s central banker said yesterday he saw scope to cut interest rates further to ensure a durable economic upswing and cautioned about falling business investment and consumer spending.
Government data yesterday sought to remind investors about downside risks to the economy with exports falling 11 percent in April from a month earlier. The numbers dragged the Australian dollar down to US$0.8014 from around US$0.8040 beforehand.
As a result of a slump in exports, Australia suffered its first trade deficit since last July, just a day after first-quarter GDP showed the country dodged a recession, helped by its best trade performance in 48 years.
Exports tanked as the value of Australia’s key commodity exports tumbled, with shipments of coal, coke and briquettes down 15 percent and the metal ores and minerals component falling 10 percent, mainly due to lower prices.
“It is likely that activity has remained subdued in the June quarter,” Reserve Bank of Australia (RBA) Governor Glenn Stevens said.
“The rapid decline in business investment is almost certainly continuing. While consumer spending has held up quite well so far, it may be weaker over the next few months, as the one-off government payments pass and rising unemployment starts to weigh,” he said in a speech.
Australia grew at a faster-than-expected rate of 0.4 percent in the first three months of the year, after contracting 0.6 percent in the fourth quarter of last year. It is one of the few developed nations to have avoided a recession.
But policymakers are treading a careful line, trying not to overstate the prospects of recovery amid growing worries that rapidly declining business investments will lead to higher unemployment.
Earlier this week, the RBA kept interest rates unchanged at 3 percent and said with inflation trending lower, the door was open for more rate cuts. It has cut its cash rate by 4.25 percentage points in just seven months, taking it to a record low of 3 percent.
The Labor government has also weighed in over the same period, announcing record stimulus packages totaling more than A$52 billion (US$42.9 billion).
The combined impact of the large fiscal and monetary stimulus has played a role in cushioning Australia from the worst global downturn in decades, Stevens said.
He said monetary policy aimed to cut borrowing costs and support demand but the central bank would be careful not to encourage unsustainable debts.
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