#ReserveBankofAustralia

[enterprisewired]

Australia’s Central Bank Cuts Interest Rates but Remains Cautious on Further Easing

Source: reuters.com

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RBA Implements First Rate Cut in Four Years

In a significant move, the Reserve Bank of Australia (RBA) reduced its benchmark interest rate by 25 basis points to 4.1% on Tuesday, marking the first rate cut since November 2020. The decision provides relief to borrowers and adds a positive note for Prime Minister Anthony Albanese as he faces an upcoming election no later than May 17. Analysts speculate that the prime minister may leverage the economic development to call for an early election.

The rate reduction follows lower-than-expected core inflation figures for the fourth quarter, which stood at 3.2%. However, despite the policy shift, the RBA remained cautious about the possibility of additional cuts. Market indicators suggest a low probability of another reduction in April, though a May adjustment remains a strong possibility.

Cautious Approach Despite Inflation Progress

While acknowledging progress in curbing inflation, the RBA emphasized its prudent stance, warning against premature easing of monetary policy. “The Board remains cautious on prospects for further policy easing,” the central bank stated, highlighting ongoing risks tied to the strong labor market. The RBA maintained that monetary policy remains restrictive even after the rate adjustment.

Governor Michele Bullock reinforced the central bank’s stance, countering market expectations of multiple rate cuts this year. She asserted that more data is needed to confirm inflation’s downward trend before committing to further policy changes. Additionally, concerns persist over potential inflationary pressures, particularly given the robust job market, where the unemployment rate stood at 4.0% in December.

The Australian dollar dipped slightly following the announcement, while three-year bond futures also saw minor declines. Meanwhile, the country’s leading banks aligned with the central bank’s move by lowering their interest rates by 25 basis points.

Economic Implications and Future Projections

Despite Australia trailing other major economies in monetary easing, the Reserve Bank of Australia’s decision reflects its attempt to balance economic stability with inflation control. Neighboring New Zealand is anticipated to implement a larger 50-basis point cut soon, while the U.S. Federal Reserve appears to be pausing its easing cycle.

Australia’s inflation rate for the last quarter stood at 2.4%, within the RBA’s target range of 2-3%. The trimmed mean inflation measure also slowed to 3.2% and is projected to decline to 2.7% by mid-2027. Gareth Aird, Head of Australian Economics at Commonwealth Bank, described the move as a slight easing of economic constraints rather than aggressive stimulus.

The rate cut is expected to provide relief in the housing sector, where affordability remains a concern despite recent price declines. Treasurer Jim Chalmers welcomed the move, calling it a “positive step” for economic stability while acknowledging further efforts are necessary. Experts anticipate only two more cuts in the current easing cycle, with the Reserve Bank of Australia monitoring household spending and broader economic trends before making further decisions.

[usnewsper-business]

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[newsbites]

News from Australia, 3 July

The Queensland opposition is demanding the state government to explain and fix the inadequate healthcare in Indigenous communities following a coroner's findings on the deaths of three Indigenous women with rheumatic heart disease.

The coroner's report highlighted the failure of health systems in remote Indigenous communities and emphasized that rheumatic heart disease is preventable and largely a result of poverty and social disadvantage.

The opposition leader is calling for a full review of the government's Aboriginal and Torres Strait Islander Cultural Capability Framework, release of the implementation schedule for the coroner's recommendations, and an independent review of the government's strategy to end rheumatic heart disease.

2. Scientists have developed an approach to select coral species for reef restoration programs, focusing on species that can optimize coral reef survival in a warming world.

The selection process considers both ecological characteristics and trait diversity to ensure species diversity and ecosystem function in future coral reefs.

This approach provides a simple framework for restoration practitioners to select target species based on spatial scale and available resources.

3. The Reserve Bank of Australia is expected to raise its interest rate by 25 basis points to 4.35% in order to combat high inflation.

Economists are divided on whether the RBA will hike rates or hold them steady, with a near split between those expecting a hike and those predicting a pause.

Despite a slight slowdown in inflation, the RBA is likely to continue tightening monetary policy due to strong employment growth and the need to address the disinflation task.

4. Indonesian President Joko Widodo's visit to Australia near the end of his term is seen as an important statement for bilateral relations and the potential for concrete economic projects.

Talks between Australia and Indonesia may focus on the supply of minerals for battery and electric vehicle manufacturing, with opportunities for reciprocal trade and cooperation.

While there are concerns about the AUKUS defense pact, there is potential for positive steps in security cooperation between the two nations in the Indo-Pacific region.

5. The Indonesian government is actively working to increase the number of Indonesian language learners in Australia.

Efforts are being made to support the development of Indonesian language learning in NSW, Queensland, and South Australia.

'Indonesia in Action Day' organized by AIYA NSW and the University of Sydney showcased the importance of promoting Indonesian language and culture.

[dezvoltarefinanciara]

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[coindelite-blog]

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[chrisjacobproperty-blog]

December interest rate decision

The RBA has once again left the cash interest rate on hold ending the year at a low of 1.5%. The cash rate has remained unchanged since August 2016!

Key points:

No surprises here, but the official cash rate has been kept on hold again at 1.5%.

Ending the year with the low, the 1.5% cash rate has remained unchanged since August 2016!

Most analysts are expecting rates to remain on hold until late 2018.

Read on for the basis of the RBA’s decision.

(more…)

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Reserve Bank of Australia http://www.mad-monkey.co.uk/cgi-bin/default.pl?06,08-10-19-ReserveBankofAustralia http://www.mad-monkey.co.uk/cgi-bin/default.pl?06,08-10-19-ReserveBankofAustralia

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Asian markets fall, yen firm as markets await US payrolls

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Reserve Bank reaffirms rising dollar warning #ReserveBankofAustralia #RBA #RBA http://dlvr.it/Pb1wpP

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