Australia’s central bank yesterday reduced its benchmark interest rate for the first time since October 2020 as the nation’s inflation cools.
The Reserve Bank of Australia (RBA) reduced the cash rate by a quarter percentage point from 4.35 percent to 4.1 percent at its first board meeting of the year. The central bank had held the cash rate at 4.35 percent since November 2023.
The cut was widely anticipated after inflation rose only 0.2 percent in the December quarter last year and 2.4 percent for the calendar year. Annual inflation peaked at 7.8 percent two years earlier.
Photo: Bloomberg
“Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance,” the central bank’s board said in a statement.
RBA Governor Michele Bullock later advised against believing economic forecasts that several more rate cuts were expected this year. The board would next consider changing interest rates at its meeting on April 1.
“Some other central banks have cut interest rates quite sharply over the past year, but we have taken a different strategy to most,” Bullock told reporters.
“Our policy rate was not raised as much as many countries overseas. We judged that while inflation expectations remained anchored, we could take a bit longer to bring inflation back to the target band, but we could keep unemployment lower,” she added.
Unemployment in Australia remained at near-record low levels of 4 percent in December last year, up from 3.9 percent the previous year.
Bullock said that US plans to increase tariffs on trading partners had the potential to be bad for economic activity around the world.
“The tariff threats and what’s going on overseas is very uncertain and probably even worse, it’s unpredictable,” Bullock said.
The rate shift is a welcome development for Australian Prime Minister Anthony Albanese’s center-left Labor Party government which will seek reelection at elections due by May 17.
Australian Treasurer Jim Chalmers welcomed the independent board’s decision.
“This is the rate relief Australians need and deserve,” Chalmers said in a statement. “It won’t solve every problem in our economy or in household budgets but it will help.”
The high cost of living and a shortage of housing around Australia are expected to be major issues in the upcoming election campaign.
DAMAGE REPORT: Global central banks are assessing war-driven inflation risks as the law of unintended consequences careens around the world, spiking oil prices Central banks from Washington to London and from Jakarta to Taipei are about to make their first assessments of economic damage after more than two weeks of conflict between the US and Iran. Decisions this week encompassing every member of the G7 and eight of the world’s 10 most-traded currency jurisdictions are likely to confirm to investors that the specter of a new inflation shock is already worrying enough to prompt heightened caution. The US Federal Reserve is widely expected to do exactly what everyone anticipated weeks ahead of its March 17-18 policy gathering: hold rates steady. The narrative surrounding that
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) share of the global foundry market rose to almost 70 percent last year amid booming demand for artificial intelligence (AI), market information advisory firm TrendForce Corp (集邦科技) said on Thursday. The contract chipmaker posted US$122.54 billion in revenue, up 36.1 percent from a year earlier, accounting for 69.9 percent of the global market, TrendForce said. Its share was up from 64.4 percent in 2024, it said. TSMC’s closest rival, Samsung Electronics, was a distant second, posting US$12.63 billion in sales, down 3.9 percent from a year earlier, for a 7.2 percent share of the global market. In the
At a massive shipyard in North Vancouver, Canadian workers grind metal beams for a powerful new icebreaker crucial to cementing the country’s presence in the increasingly contested arctic. Icebreakers are specialized, expensive vessels able to navigate in the frozen far north. And “this is the crown jewel,” said Eddie Schehr, vice president of production at the Seaspan shipyard. For Canadian Prime Minister Mark Carney, who heads to Norway next Friday to observe arctic defense drills involving troops from 14 NATO states, Canada’s extreme north has emerged as a strategic priority. “Canada is and forever will be an Arctic nation,” he said ahead of
Chinese entrepreneur Frank Gao used to spend long hours running his social media accounts but now outsources the chore to artificial intelligence (AI) agent tool OpenClaw, which is taking China by storm despite official warnings over cybersecurity. OpenClaw, created in November by an Austrian coder, differs from bots such as ChatGPT because it can execute real-life tasks such as sending e-mails, organizing files or even booking flight tickets. “Since January, I’ve spent hours on the lobster every day,” Gao said in an interview, referring to OpenClaw’s red crustacean mascot. “We’re family.” After downloading OpenClaw, users connect it to artificial intelligence models of their
RSS