Reserve Bank Cuts Interest Rates By 0.5%

May 01, 2012

The Reserve Bank of Australia has cut the cash rate by 50 basis points, or 0.5%, to 3.75%.

The decision, predicted last night by former RBA Governor Bernie Fraser, takes interest rates back to where they were in December 2009.

Treasurer Wayne Swan, Shadow Treasurer Joe Hockey and Australian Chamber of Commerce and Industry Chief Executive Peter Anderson have all commented on the rates decision.

  • Listen to Treasurer Wayne Swan’s press conference (12m) – transcript below

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  • Listen to Shadow Treasurer Joe Hockey’s media conference (5m)

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  • Listen to Peter Anderson’s media conference (6m)

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  • Table of interest rate changes since 1990

Text of statement by RBA Governor Glenn Stevens.

At its meeting today, the Board decided to lower the cash rate by 50 basis points to 3.75 per cent, effective 2 May 2012. This decision is based on information received over the past few months that suggests that economic conditions have been somewhat weaker than expected, while inflation has moderated.

Growth in the world economy slowed in the second half of 2011, and is likely to continue at a below-trend pace this year. A deep downturn is not occurring at this stage, however, and in fact some forecasters have recently revised upwards their global growth outlook. Growth in China has moderated, as was intended, and is likely to remain at a more measured and sustainable pace in the future. Conditions in other parts of Asia softened in 2011, partly due to natural disasters, but have recently shown some tentative signs of improving. Among the major countries, conditions in Europe remain very difficult, while the United States continues to grow at a moderate pace. Commodity prices have been little changed, at levels below recent peaks but which are nonetheless still quite high. Australia’s terms of trade similarly peaked about six months ago, though they too remain high. [Read more...]

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Gillard Commits To Budget Surplus, Pressures Reserve Bank

Apr 19, 2012

Prime Minister Julia Gillard has reaffirmed her government’s intention to produce a budget surplus and claimed the Reserve Bank has scope for further interest rate cuts.

Gillard’s comments were made in a speech in Perth to a business lunch hosted by the Western Australian Chamber of Commerce and the Western Australian Chamber of Minerals and Energy.

A transcript will be published on this page when it becomes available.

  • Listen to Gillard’s speech:

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Reserve Bank Leaves Cash Rate Unchanged

Apr 03, 2012

The Reserve Bank has left interest rates unchanged at its monthly meeting today.

Statement by RBA Governor Glenn Stevens: Monetary Policy Decision

At its meeting today, the Board decided to leave the cash rate unchanged at 4.25 per cent.

Recent information is consistent with the expectation that the world economy will grow at a below-trend pace this year, but does not suggest that a deep downturn is occurring. Several countries in Europe will record very weak outcomes, but the US economy is continuing a moderate expansion. Growth in China has moderated, as was intended, and is likely to remain at a more measured and sustainable pace in the future. Conditions around other parts of Asia softened in 2011, partly due to natural disasters, but are not showing signs of further deterioration. Some moderation in inflation has allowed policymakers in the region to ease monetary policies somewhat. Commodity prices declined for a few months last year and are noticeably off their peaks, but have been relatively stable for a while now, at quite high levels. Australia’s terms of trade have peaked, though they remain high. [Read more...]

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Reserve Bank Cuts Interest Rates Another 0.25% To 4.25%

Dec 06, 2011

The Reserve Bank of Australia has cut interest rates for the second month in a row.

The reduction of 25 basis points – 0.25% – takes the cash rate to 4.25%.

The Treasurer, Wayne Swan, welcomed the cut, describing it as “welcome Christmas cheer”. He called on the banks to pass on the reduction in full.

Statement on Monetary Policy from Glenn Stevens, Governor of the Reserve Bank of Australia.

At its meeting today, the Board decided to lower the cash rate by 25 basis points to 4.25 per cent, effective 7 December 2011.

Growth in the global economy has moderated this year after a strong performance in 2010. Some of the slowing reflected temporary factors, and as these passed, the pace of expansion in the United States and much of Asia began to pick up around mid year. China’s growth has been slowing, as policymakers there had intended. Trade in Asia is now, however, seeing some effects of a significant slowing in economic activity in Europe. [Read more...]

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Reserve Bank Lowers Interest Rates 0.25%

Nov 01, 2011

The Reserve Bank of Australia has lowered the cash rate 0.25% to 4.5%.

This is the first movement in interest rates since November last year.

Reserve Bank Governor Glenn Stevens said there had been a “moderation in the pace of global growth, though fears of a major downturn have not been borne out so far”. He said trade performance “is starting to see some effects of a significant slowing in economic activity in Europe” and noted that commodity prices “have generally declined over recent months”.

Statement from Glenn Stevens, Governor of the Reserve Bank.

At its meeting today, the Board decided to lower the cash rate by 25 basis points to 4.5 per cent, effective 2 November 2011.

Recent information is consistent with a moderation in the pace of global growth, though fears of a major downturn have not been borne out so far. The pace of US economic expansion picked up in the September quarter, but is still only moderate and leaves considerable spare capacity. China’s growth has slowed, as policymakers there had intended. Output in Asia has now recovered from the effects of the Japanese earthquake, and domestic demand in the region is generally expanding. Trade performance, however, is starting to see some effects of a significant slowing in economic activity in Europe, where the prospects are for economic weakness to continue. Commodity prices, while still at high levels, have generally declined over recent months. [Read more...]

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Reserve Bank Leaves Interest Rates On Hold

Feb 01, 2011

The Reserve Bank of Australia has left the cash rate unchanged at 4.75%.

The bank’s February decision was announced at 2.30pm today.

Text of statement from Reserve Bank Governor Glenn Stevens.

At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent.

Global output grew strongly in 2010, notwithstanding the relatively subdued performance of several of the major economies. The Chinese and Indian economies in particular have recorded very strong expansions, and price pressures, particularly for food and raw materials, have picked up. Concerns about sovereign creditworthiness in Europe have remained prominent and uncertainty from this source seems likely to persist for some time. Overall, however, the global economy continues to look strong going into 2011. Commodity prices have remained high and in many instances have risen further over recent months.

Australia’s terms of trade are at their highest level since the early 1950s and national income is growing strongly. There have been further indications that private investment is beginning to pick up in response to high levels of commodity prices. In the household sector thus far, in contrast, there continues to be caution in spending and borrowing, and an increase in the saving rate. Asset values have generally been little changed over recent months and overall credit growth remains quite subdued, notwithstanding evidence of some greater willingness to lend. [Read more...]

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Reserve Bank Governor’s Statement to House of Reps Economics Committee

Nov 26, 2010

This is the text of the opening statement to the House of Representatives Standing Committee on Economics by Glenn Stevens, Governor of the Reserve Bank.

When we last met with the Committee in February this year, it was becoming clear that the recovery in the global economy was proceeding faster than many had expected. It was also clear that the strongest performance was in the emerging world, while recoveries in countries that had been at the centre of the financial events of 2007 and 2008 were relatively subdued. Global financial markets had continued to improve, but were paying close attention to the rise in sovereign debt in a number of countries.

At that time, people were talking about an expansion in global GDP of something like 4 per cent in 2010. As it turns out, it looks like the outcome will be stronger than that: current estimates for the year are about 4¾ per cent, which is above trend. The pattern of growth is still rather uneven. The additional strength has been concentrated in the emerging countries, with growth in China and India running at a pace of around 10 per cent in 2010. In contrast, growth of about 2½ per cent for the G7 group, after a contraction of around 3½ per cent in 2009, will leave a considerable margin of spare capacity and particularly of unemployed labour. [Read more...]

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What Caused The Financial Crisis?

Mar 19, 2009

The global financial crisis is “a crisis of credit markets”, says Malcolm Edey, Assistant Governor (Economic) of the Reserve Bank of Australia.

In an address to the Foundation for Aged Care Business Breakfast in Sydney, Edey traced the origins of the financial crisis, discussed its effects and looked at responses to the crisis.

This is the text of Malcolm Edey’s speech:

I’ve been asked to talk this morning about the current financial crisis: where it came from, and the effects that it’s having on the economy.

What we refer to as the global financial crisis is, at its core, a crisis of credit markets, centred particularly in the United States, the UK and Europe, but with significant spill-over effects to the rest of the world.

Over the last year or so, financial institutions in the major economies have reported losses on a large scale. Some of these institutions have become insolvent, or have had to be taken over or rescued by their governments. Associated with all of that has been a massive swing in the appetite of world financial markets for risk, and in their capacity to accept risk. The result has been a shift from easily available credit to tight credit.

[Read more...]

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Reserve Bank Cuts Interest Rates Another 0.75%

Nov 04, 2008

The Reserve Bank of Australia has cut the cash rate a further 0.75% to 5.25%.

The 0.75% cut follows reductions of 1.0% in October and 0.25% in September.

Listen to Treasurer Wayne Swan comment on the interest rate decision:

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[Read more...]

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Global Economic Catastrophe Now Less Likely Says Reserve Bank Governor

Oct 21, 2008

Glenn Stevens, Governor of the Reserve Bank of AustraliaThe Governor of the Reserve Bank of Australia, Glenn Stevens, says the risk of a “global economic catastrophe” has declined.

In an address to the Trans-Tasman Business Circle today, Stevens said: “At moments like this, it is hazardous to make predictions. However, it seems to me that the key elements of dealing with the root issues in the crisis are starting to come into place. Policy-makers in the major countries do ‘get it’. The plans are not precisely uniform across countries – that is never achievable anyway – but we can, I think, see the shape of a broad common outline. It addresses the issues of liquidity, capital and confidence. There is much more work to be done yet on the design details, and one area in which further international co-operation would be helpful is in the area of making these various guarantee arrangements broadly consistent. But the world is, it seems to me, getting on to a better path. As a result, the likelihood of a global catastrophe has in fact declined over the past couple of weeks.” [Read more...]

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