TOKYO, Oct 8 ― Japan's household spending rose for a ninth straight month in August, offering some relief for the export-dependent economy amid weak global demand and a protracted US-China trade war. But separate data today showed wages fell for…
TOKYO, Oct 7 — The yen gained slightly and the yuan slipped a tad in early Asian trade today on a media report that China wants the scope of this week’s trade talks and any deal with the United States to be narrow. Bloomberg reported that…
NEW YORK, Oct 4 — Wall Street stocks rose early today after a US government report showed unemployment at a 50-year low, mitigating somewhat the fears of a recession. US stocks have been under pressure much of the week following lacklustre…
WASHINGTON, Oct 4 — America’s jobless rate tumbled in September to its lowest level in 50 years, which could help assuage fears of an economic slowdown, according to government data released today. But while job creation continued, the pace was…
BRUSSELS, Oct 1 — A Belgian commercial court in Ghent today declared the local travel agency business of British tour operator Thomas Cook bankrupt, putting 500 jobs at risk. Thomas Cook Retail Belgium is the group’s largest Belgian subsidiary…
SYDNEY: Australia’s central bank cut interest rates for the third time this year on Tuesday in a bid to stimulate a sluggish economy and signalled it was prepared to do more if needed, knocking the local dollar to a one-month low.
The country’s economy has expanded for 28 years without a recession, but risks have intensified over the past year, with growth slowing, inflation lukewarm, the property market subdued and unemployment ticking higher.
The Reserve Bank of Australia’s (RBA) quarter-point cut took the cash rate to an all-time low of just 0.75%, leaving little room for more reductions and raising the possibility of unconventional policy easing.
RBA Governor Philip Lowe said moves by global central banks to ease monetary policy played a part in the decision as he signalled the need for an extended period of low interest rates.
“The Board will continue to monitor developments, including in the labour market, and is prepared to ease monetary policy further if needed…,” Lowe said.
Financial futures are now pricing in a 60% chance of a fourth cut to 0.5% in November, compared with under 30% before the latest decision.
Expectations that rates will be lower for longer sent the Australian dollar slipping to $0.6706, its weakest since early September.
“In cutting rates so aggressively this year, the RBA is hoping to generate a stronger labour market, higher wage growth and to stimulate domestic consumption,” said Anthony Doyle, a Sydney-based, cross-asset strategist at Fidelity.
“Fortunately for the RBA, the transmission mechanism of monetary policy is fairly quick in the Australian economy,” he said, noting around 80% of mortgages were on variable rates.
The RBA’s back-to-back easings in June and July have so far done little to boost activity outside of the housing market.
Indeed, figures earlier in the day showed home prices across Australia’s capital cities jumped 1.1% in September, led by Sydney and Melbourne, but approvals to build new homes collapsed to the lowest since 2013.
Economists expect construction-related job losses in coming months which could take the unemployment rate to as high as 5.5% from 5.3% now and the RBA’s goal of around 4.5%.
“The RBA now has only three, or possibly even fewer, more conventional cuts available to them before they will have to venture into unconventional monetary easing territory – negative rates, QE (quantitative easing), or bond yield targeting,” Rob Carnell, chief Asia-Pacific economist for ING wrote in a note.
Governor Lowe acknowledged the RBA’s decision to lower rates was partly in response to slack in the labour market. The jobless rate in August worsened to a one-year high of 5.3%.
“The Board took the decision to lower interest rates further today to support employment and income growth and to provide greater confidence that inflation will be consistent with the medium-term target,” Lowe said in a short statement accompanying the rate decision.
“The economy still has spare capacity and lower interest rates will help make inroads into that.”
Lowe sees a “gentle turning point” for the economy after annual growth hit a decade low of 1.4% in the quarter-ended June.
The governor is due to speak at a business event in Melbourne later in the day where he is expected to throw more light on future policy course.
Record low interest rates have boosted home prices, helping end two years of continuous declines which ate into household wealth and confidence in a blow to consumption and the broader economy.
Some economists believe the price revival could prove a blessing for the construction sector, which has seen a severe downturn in new home approvals, particularly for the once red-hot apartment sector.
Building approvals fell 1.1% in August, less than a sharp 10% slide in July but confounding market expectations for a bounce of 2.5%, data from the Australian Bureau of Statistics (ABS) showed.
One positive sign in the data was a small bounce in approvals to build new apartments while non-residential construction surged 54%. – Reuters
PARIS, Sept 27 — France will cut taxes by more than €10 billion (RM45.95 billion) next year and Germany should follow Paris' footsteps with fiscal stimulus to revive its flagging economy, France's finance minister said yesterday. Presenting…
YANGON, Sept 22 — On her scruffy, downtrodden bank of the river, teashop-owner Khin works just a few hundred metres across the muddy water from Yangon and dreams of the riches promised by a new bridge linking to Myanmar's commercial heart. “The…
WASHINGTON, Sept 20 — Federal Reserve policymaker James Bullard said today he dissented from this week’s vote on interest rates because he wanted to see a bigger rate cut as “insurance” for the US economy. Bullard cited elevated trade…