Australia’s central bank yesterday cut its interest rates to record lows in what is expected to be the first in a spate of policy stimulus around the world to fight the economic fallout from the COVID-19 outbreak.
It was the fourth reduction by the Reserve Bank of Australia in less than a year, bringing the cash rate to 0.5 percent amid mounting evidence momentum in the A$2 trillion (US$1.31 trillion) economy has stalled.
The coronavirus epidemic is having a “significant” hit on Australia’s economy and it is difficult to predict how large and long-lasting the effects would be, Reserve Bank of Australia Governor Philip Lowe said a short post-meeting statement.
The board “will continue to monitor developments closely and assess the implications of the coronavirus for the economy. The board is prepared to ease monetary policy further to support the Australian economy,” Lowe added.
The Australian tourism, transport, hospitality and retail sectors have been jolted by a travel ban on China since the start of last month.
Earlier, Australian Prime Minister Scott Morrison said his government was working closely with the central bank on a response to the coronavirus outbreak, adding that both were “highly aligned” in their understanding of the challenges before them.
Morrison also urged the nation’s biggest banks to lower their lending rates.
Commonwealth Bank of Australia and Westpac Banking Corp were quick to respond, reducing their variable home loan rates by 25 basis points.
Malaysia’s central bank yesterday also cut its benchmark interest rate.
Bank Negara Malaysia reduced the overnight policy rate for a second time this year, lowering it by 25 basis points to 2.5 percent, as forecast by 15 of 24 economists surveyed by Bloomberg.
The rate cut “is intended to provide a more accommodative monetary environment to support the projected improvement in economic growth amid price stability,” the central bank said in a statement.
Malaysia’s effort to shore up the economy amid fresh threats to growth takes the key interest rate to its lowest level since July 2010.
The policy easing follows a 20 billion ringgit (US$4.75 billion) fiscal stimulus package last week to counter the impact of the coronavirus outbreak.
The central bank said first-quarter economic growth would be negatively affected by the outbreak, especially the tourism and manufacturing sectors.
“Although domestic growth is expected to gradually improve in the second half of the year, there are key downside risks, mainly stemming from the evolving nature and prolonged impact of the COVID-19 outbreak, and continued weakness in commodity-related sectors,” it said.
The Malaysian government last week revised its economic forecast for this year to 3.2 percent to 4.2 percent, down from 4.8 percent previously.
It also widened the fiscal deficit target to 3.4 percent of GDP, from 3.2 percent.
The COVID-19 outbreak is plunging the world economy into its worst downturn since the global financial crisis more than 10 years ago, the Organisation for Economic Co-operation and Development warned on Monday, urging governments and central banks to implement measures to avoid an even steeper slump.
Additional reporting by Bloomberg
To many, Tatu City on the outskirts of Nairobi looks like a success. The first city entirely built by a private company to be operational in east Africa, with about 25,000 people living and working there, it accounts for about two-thirds of all foreign investment in Kenya. Its low-tax status has attracted more than 100 businesses including Heineken, coffee brand Dormans, and the biggest call-center and cold-chain transport firms in the region. However, to some local politicians, Tatu City has looked more like a target for extortion. A parade of governors have demanded land worth millions of dollars in exchange
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue jumped 48 percent last month, underscoring how electronics firms scrambled to acquire essential components before global tariffs took effect. The main chipmaker for Apple Inc and Nvidia Corp reported monthly sales of NT$349.6 billion (US$11.6 billion). That compares with the average analysts’ estimate for a 38 percent rise in second-quarter revenue. US President Donald Trump’s trade war is prompting economists to retool GDP forecasts worldwide, casting doubt over the outlook for everything from iPhone demand to computing and datacenter construction. However, TSMC — a barometer for global tech spending given its central role in the
An Indonesian animated movie is smashing regional box office records and could be set for wider success as it prepares to open beyond the Southeast Asian archipelago’s silver screens. Jumbo — a film based on the adventures of main character, Don, a large orphaned Indonesian boy facing bullying at school — last month became the highest-grossing Southeast Asian animated film, raking in more than US$8 million. Released at the end of March to coincide with the Eid holidays after the Islamic fasting month of Ramadan, the movie has hit 8 million ticket sales, the third-highest in Indonesian cinema history, Film
RSS