Australia’s central bank left interest rates on hold yesterday, pausing a series of sharp hikes that have drawn criticism from homeowners.
The Reserve Bank of Australia (RBA) held borrowing costs at 3.6 percent, ending a run of 10 successive rate hikes aimed at taming inflation.
RBA Governor Philip Lowe said the pause would allow the bank to take stock of previous increases and a global outlook that remains “subdued.”
Photo: Reuters
“The recent banking system problems in the United States and Switzerland have resulted in volatility in financial markets and a reassessment of the outlook for global interest rates,” Lowe said.
The news gave a boost to stocks, with the S&P/ASX 200 rising 0.2 percent in the afternoon, while the Australian dollar fell as much as 0.4 percent against the US dollar.
The RBA has come under fire from homeowners who have seen average monthly mortgage repayments skyrocket.
Australians are forking out an extra A$250 (US$169) every week to meet the repayments on an average mortgage of about A$600,000.
Household inflation in Australia sits at about 6.8 percent — down from 7.8 percent in December last year, but still stubbornly above the central bank’s target of between 2 and 3 percent.
Lowe said “some further tightening of monetary policy may well be needed to ensure that inflation returns to target.”
Australia, like most countries fighting inflation, faces a delicate balancing act to bring prices down without stifling economic growth and sparking a recession.
“The path to achieving a soft landing remains a narrow one,” Lowe said.
Separately, New Zealand businesses remained downbeat in the first quarter of this year as high interest rates and slowing demand push the nation toward recession.
A net 66 percent of businesses expect the economy to deteriorate in the next 12 months, the New Zealand Institute of Economic Research said in its quarterly survey of business opinion.
That is little changed from 70 percent in the fourth quarter of last year, which was the lowest since the early 1970s.
Economic growth is slowing after the Reserve Bank of New Zealand’s (RBNZ) aggressive monetary policy tightening, which is aimed at curbing demand in order to reduce inflation.
The central bank is tipped to raise the official cash rate by a further 25 basis points to 5 percent today, but economists say borrowing costs might be nearing a peak.
“There are signs the dampening in demand the Reserve Bank has been trying to engineer is starting to gain traction,” institute principal economist Christina Leung told a briefing. “There are encouraging signs for the RBNZ. The key question is whether it believes it has done enough.”
Leung expects the central bank will raise the official cash rate tomorrow, but then take a wait-and-see approach to assess the impact of what would be 475 points of tightening since late 2021.
Additional reporting by Bloomberg
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
RSS