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This website is in imminent danger of being shut down. It has been online since 1995, but the personal circumstances of the owner, Malcolm Farnsworth, are such that economies have to be made. Server costs and suchlike have become prohibitive. At the urging of people online, I have agreed to see if Patreon provides a solution. More information is available at the Patreon website. If you are able to contribute even $1.00/month to keep the site running, please click the Patreon button below.


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Swan And Hockey Argue Over Interest Rates

Following the 0.25% reduction in interest rates by the Reserve Bank, Treasurer Wayne Swan and his Liberal shadow Joe Hockey have taken different stances on the cut.

Swan said the economy was running close to trend. He said the interest rate cut was “an early Christmas present that hardworking Aussies deserve”.

Hockey said interest rates were now at emergency levels and the government and Reserve Bank were at odds with each other over economic policy. [Read more…]


Reserve Bank Cuts Interest Rates By 0.25%

The Reserve Bank has cut interest rates a further 0.25%.

The cash rate has been reduced from 3.25% to 3.00%.

The decision was announced at 2.30pm today. It is the fourth cut in interest rates this year. Rates have been reduced by 1.25% since this time last year and are at their lowest point since April 2009 during the global financial crisis.

Text of statement from Reserve Bank Governor Glenn Stevens.

At its meeting today, the Board decided to reduce the cash rate by 25 basis points to 3.0 per cent, effective 5 December 2012.

Global growth is forecast to be a little below average for a time. Risks to the outlook are still seen to be on the downside, largely as a result of the situation in Europe, though the uncertainty over the course of US fiscal policy is also weighing on sentiment at present. Recent data suggest that the US economy is recording moderate growth and that growth in China has stabilised. Around Asia generally, growth has been dampened by the more moderate Chinese expansion and the weakness in Europe.

Key commodity prices for Australia remain significantly lower than earlier in the year, though trends have been more mixed over the past few months. The terms of trade have declined by about 15 per cent since the peak, to a level that is still historically high.

Sentiment in financial markets remains better than it was in mid year, in response to signs of progress in addressing Europe’s financial problems, though Europe is likely to remain a source of instability for some time. Long-term interest rates faced by highly rated sovereigns, including Australia, remain at exceptionally low levels. Capital markets remain open to corporations and well-rated banks, and Australian banks have had no difficulty accessing funding, including on an unsecured basis. Borrowing conditions for large corporations are similarly attractive and share prices have risen since mid year. [Read more…]


Reserve Bank Leaves Interest Rates On Hold

The Reserve Bank has opted not to further reduce interest rates at its monthly meeting today.

The cash rate remains at 3.25%.

Statement from Reserve Bank Governor Glenn Stevens.

At its meeting today, the Board decided to leave the cash rate unchanged at 3.25 per cent.

Global growth is forecast to be a little below average for a time. Risks to the outlook are still seen to be on the downside, largely as a result of the situation in Europe, where economic activity is still contracting. Risks elsewhere seem more balanced. The United States is recording moderate growth, while recent data from China suggest growth there has stabilised. Around Asia generally, growth has been dampened by the more moderate Chinese expansion and the weakness in Europe.

Key commodity prices for Australia remain significantly lower than earlier in the year, though trends have been more mixed over the past couple of months, with some prices recovering some ground while others declined further. The terms of trade have declined by about 13 per cent since the peak last year, but are likely to remain historically high. [Read more…]


Reserve Bank Cuts Interest Rates By 0.25%

The Reserve Bank of Australia has cut the cash rate by 0.25%.

RBA Governor Glenn Stevens said: “The Board judged that, on the back of international developments, the growth outlook for next year looked a little weaker, while inflation was expected to be consistent with the target. The Board therefore decided that it was appropriate for the stance of monetary policy to be a little more accommodative.”

The cash rate is now 3.25%. [Read more…]


Glenn Stevens Forecasts Peak Of Resources Boom In Next Two Years

Glenn StevensIn one of his regular appearances before the House Standing Committee on Economics, Reserve Bank Governor Glenn Stevens has forecast a peak in the resources boom, stable economic growth in the near future, and defended the bank over its handling of the Note Printing Australia and Securency corruption allegations.

On the economy, Stevens said “the economy appears to have been recording reasonable overall growth, relatively low unemployment, and low inflation”. He forecast a peak in the resource investment boom in “the next year or two”. He said: “After that the rate of resource investment is likely to decline, while the export shipments of the resources themselves will pick up. By then we might expect that some other sectors that have been weak of late, like residential and non-residential construction, might be starting to pick up. Overall, growth is forecast still to be close to trend, albeit with a different composition from that seen in the past year or two, and inflation consistent with the target.”

Opening statement by Reserve Bank Governor Glenn Stevens to the House of Representatives Standing Committe on Economics.

Since the meeting we had in February, assessments of the global and local economies have waxed and waned. In February, sentiment about the international financial system was recovering somewhat, after a scare late in 2011. The actions of the European Central Bank in extending its liquidity provision to euro area banks had taken major re-funding hurdles out of the picture for a time. This was a critically important action that bought time. It was clear that the European economy had slowed, that the United States was still growing, but at only a modest pace, and that China’s growth was moderating to something more sustainable. But high-frequency indicators of the global business cycle were stabilising. So even though forecasts for global growth were at that stage being marked down a bit, we did not seem to be seeing a slump of the kind seen in late 2008. Subsequently, there were actually some small upward revisions to global growth forecasts.

But, as we said at the last hearing, sorting out the problems in the euro area is likely to be a long, slow process, with occasional setbacks and periodic bouts of heightened anxiety. We saw one such bout of anxiety in the middle of this year, when financial markets displayed increasing nervousness about the finances of the Spanish banking system and the Spanish sovereign. The general increase in risk aversion saw yields on bonds issued by some European sovereigns spike higher, while those for Germany, the UK and the US declined to record lows. This ‘flight to safety’ also saw market yields on Australian government debt decline to the lowest levels since Federation. Meanwhile, many European economies saw a further contraction of economic activity. Share markets declined sharply. [Read more…]


Reserve Bank Pushes Back Over Corruption Allegations

The Reserve Bank of Australia has defended itself over allegations aired on 7.30 last night about what it knew about alleged corrupt activity at Note Printing Australia Limited prior to media reports in 2009.

The Age newspaper also provided a major report on the story in today’s edition.

Media release from the Reserve Bank of Australia.

Statement Concerning Note Printing Australia Limited and Securency International Pty Ltd

The ABC’s 7.30 program has made a number of ill-founded allegations with regard to what the Reserve Bank knew about alleged corrupt activity at Note Printing Australia Limited (NPA) prior to allegations in the media in May 2009.

The document the 7.30 program described as ‘new’ was examined at the NPA Board’s request by Freehills in 2007 as part of its investigation. The document was a statement by an NPA employee, compiled at the request of Ric Battellino, the Chair of the Bank’s Audit Committee and then Deputy Governor of the Reserve Bank. The ‘secret’ meeting between the employee and Mr Battellino was confidential at the request of the employee. This document is currently part of the evidence in current proceedings before the Court. Legal advice to the Reserve Bank is that the Bank is prohibited from disclosing it or its contents pursuant to the normal rules of Court and an order of the Supreme Court. Whether it will become part of the public record as current Committal Hearings progress will be a matter for the Court.

The Bank has previously stated that an audit done at the request of the NPA Board in 2007 showed serious deficiencies in the company’s practices and controls relating to the use of sales agents. The audit made no findings regarding illegality, but recommended a separate investigation into whether there had been a breach of Australian law. When the NPA Board received the audit report, the NPA Board decided to terminate the use of sales agents immediately and engaged Freehills to investigate whether there was a breach of Australian law. The Freehills investigation, which had direct access to the statement of the NPA employee, concluded that there was not. The question of a referral to the Australian Federal Police (AFP) therefore did not arise at that time. On any reasonable reading, the NPA Board at that time sought the appropriate information, sought appropriate advice, responded appropriately to the information it received, and reasonably relied on the advice it received.

In addition, it has been noted that in May 2009, the Chairman of Securency requested that the AFP investigate the allegations made against Securency in the media. At the start of that investigation he brought the 2007 review of NPA agent arrangements to the attention of the AFP, even though the allegations did not at that stage involve NPA. The AFP was subsequently provided with copies of the 2007 audit report and the Freehills report when they requested access to them during the course of their investigation.

The Governor has made a number of statements to the House of Representatives Economics Committee in relation to these matters. In particular, he has stated that, to the Bank’s knowledge, the first time allegations were raised about Securency was in May 2009, by The Age newspaper. That remains the case. The Governor has also responded openly to questions from the Committee about the way in which the matters at NPA in 2007 were handled. The Bank rejects the implication that the Governor or other officers of the Bank have misled the Committee.


Reserve Bank Cuts Cash Rate By 0.25%

The Reserve Bank has cut the cash by another 0.25%.

The reduction follows the 0.5% cut last month. The cash rate is now 3.50%. [Read more…]


Reserve Bank Cuts Interest Rates By 0.5%

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. [Read more…]


Gillard Commits To Budget Surplus, Pressures Reserve Bank

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. [Read more…]


Reserve Bank Leaves Cash Rate Unchanged

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…]