Australia’s central bank hiked interest rates by 25 basis points for a second successive month yesterday, saying the improving economic outlook and expected growth in Asia justified the move.
Reserve Bank of Australia (RBA) governor Glenn Stevens said the bank had decided to up the official cash rate to 3.5 percent, its highest level since February, citing “noticeably better” conditions for Australia’s major regional trading partners.
“Growth in China has been very strong, which is having a significant impact on other economies in the region and on commodity markets,” Stevens said. “For Australia’s trading partner group, growth in 2010 is likely to be close to trend.”
PHOTO: BLOOMBERG
Australia last month became the first advanced economy to raise interest rates since the global financial meltdown, declaring the risk of a recession over and lifting rates from 50-year lows.
The interest rate rise comes after the government on Monday sharply lifted its economic forecasts, flagging growth of 1.5 percent instead of a 0.5 percent contraction and indicating that unemployment would peak at a relatively modest 6.75 percent.
The central bank aggressively slashed the rate from 7.25 percent in September last year to a 49-year low of 3 percent, while the government injected stimulus of more than A$70 billion (US$63 billion) into the economy.
Stevens said economic conditions had been stronger than expected and measures of confidence had improved thanks to the stimulus measures, while private investment appeared not be as weak as forecast.
Housing and public infrastructure spending were accelerating, and Stevens said there were early signs of an improvement in labor market conditions.
Growth was likely to be close to trend and inflation near the official target of 2 percent to 3 percent, while unemployment was likely to peak at a “considerably lower level” than what was previously forecast.
“With the risk of serious economic contraction in Australia now having passed, the Board’s view is that it is prudent to lessen gradually the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker,” Stevens said.
The result was in line with market expectations of a modest rise, following the release of the lowest inflation figures in 10 years last week.
Analysts said Stevens’ tempered remarks pointed to a likely pause in further increases to the cash rate until next year.
“The specific language ... could possibly suggest the RBA believes it has done enough for the time being, possibly pausing over December and January before reassessing the appropriateness of the cash rate in February,” IG Markets analyst Cameron Peacock said.
The RBA had never in its history raised rates for three consecutive months, CommSec economist Savanth Sebastian said.
“I think there’s a good chance they will pause in December and come back in February to do the rest of their work,” Sebastian said.
NATIONAL SECURITY: The Chinese influencer shared multiple videos on social media in which she claimed Taiwan is a part of China and supported its annexation Freedom of speech does not allow comments by Chinese residents in Taiwan that compromise national security or social stability, the nation’s top officials said yesterday, after the National Immigration Agency (NIA) revoked the residency permit of a Chinese influencer who published videos advocating China annexing Taiwan by force. Taiwan welcomes all foreigners to settle here and make families so long as they “love the land and people of Taiwan,” Premier Cho Jung-tai (卓榮泰) told lawmakers during a plenary session at the Legislative Yuan in Taipei. The public power of the government must be asserted when necessary and the Ministry of
Proposed amendments would forbid the use of all personal electronic devices during school hours in high schools and below, starting from the next school year in August, the Ministry of Education said on Monday. The Regulations on the Use of Mobile Devices at Educational Facilities up to High Schools (高級中等以下學校校園行動載具使用原則) state that mobile devices — defined as mobile phones, laptops, tablets, smartwatches or other wearables — should be turned off at school. The changes would stipulate that use of such devices during class is forbidden, and the devices should be handed to a teacher or the school for safekeeping. The amendments also say
EMBRACING TAIWAN: US lawmakers have introduced an act aiming to replace the use of ‘Chinese Taipei’ with ‘Taiwan’ across all Washington’s federal agencies A group of US House of Representatives lawmakers has introduced legislation to replace the term “Chinese Taipei” with “Taiwan” across all federal agencies. US Representative Byron Donalds announced the introduction of the “America supports Taiwan act,” which would mandate federal agencies adopt “Taiwan” in place of “Chinese Taipei,” a news release on his page on the US House of Representatives’ Web site said. US representatives Mike Collins, Barry Moore and Tom Tiffany are cosponsors of the legislation, US political newspaper The Hill reported yesterday. “The legislation is a push to normalize the position of Taiwan as an autonomous country, although the official US
CHANGE OF TONE: G7 foreign ministers dropped past reassurances that there is no change in the position of the G7 members on Taiwan, including ‘one China’ policies G7 foreign ministers on Friday took a tough stance on China, stepping up their language on Taiwan and omitting some conciliatory references from past statements, including to “one China” policies. A statement by ministers meeting in Canada mirrored last month’s Japan-US statement in condemning “coercion” toward Taiwan. Compared with a G7 foreign ministers’ statement in November last year, the statement added members’ concerns over China’s nuclear buildup, although it omitted references to their concerns about Beijing’s human rights abuses in Xinjiang, Tibet and Hong Kong. Also missing were references stressing the desire for “constructive and stable relations with China” and
RSS