The Reserve Bank of Australia has decided to leave the official cash rate unchanged at a record low of 2%, but said there was scope for a rate cut down the line.
In a statement on the RBA website, governor Glenn Stevens said:
There has been speculation that Australia’s recent change in prime minister from Tony Abbott to Malcolm Turnbull will mean a shift in Australia’s choice of partners in Asia. The change does not mean that Australia will now ‘choose’ China over the United States. However, it could change what Australia means by its ‘choice’ of the United States.
It was a close call. After Australia’s leading banks lifted the variable rate mortgage rates recently, many observers expected the Reserve Bank of Australia to offset the tightening with a rate cut in early November. Others emphasized that the variable rate increases were linked to regulatory changes not to financial conditions that the RBA could influence.
Today’s inflation report swung sentiment toward a rate cut next week. It appears that the derivatives market is pricing in about an 80% chance of a 25 bp rate cut.
By the time I met Grace, she had been in Australia on a bridging visa for about 18 months. Part way into the interview, she reached for a stack of papers in her bag. “Let me show you something… this is from the bank,” she said. On her account statement, Grace showed me the recurring payments she was receiving from a non-profit agency that was disbursing basic living allowances to asylum seekers living in the community. She was receiving about A$450 per fortnight.
Earlier this year, during the Prince Phillip knighthood debacle (dubbed #knightmare by Twitter) we speculated how Tony Abbott could make Malcolm Turnbull his treasurer, in place of the hapless Joe Hockey, and thereby save his prime ministership. Furthermore, we said if he did not, Malcolm Turnbull might go one better and take the top prize instead.
In the latest instalment of Uber versus the taxi industry, the Taxi Industry Forum of WA has conceded the sector could have done better. Responding to a Western Australian Government green paper into the “on demand” transport industry, it has reportedly criticised the UberX model, but also admitted its own failure to keep up with technological advances and changing consumer expectations.
Sometimes boring debates are important. Mind numbing detail gets in the way of good policy. Therefore, it is with an obscure feature of credit cards known as “interchange fees.”
Currently, these fees are both highly regulated, and inappropriately regulated by the Reserve Bank of Australia (RBA) and not the Australian Consumer and Competition Commission (ACCC).
The International Monetary Fund (IMF) recently released a report regarding which nations will suffer the most loss resulting from China’s slowing investment growth. According to the IMF, Australia will be the worst hit advanced economy, with only developing economies Iran, Kazakhstan, Saudi Arabia, Zambia, and Chile suffering a bigger loss.
Malcolm Turnbull was all smiles after his overnight ascension to the prime ministership, but the fact is he has inherited some grim economic realities. He said yesterday that he decided to challenge Abbott for the leadership because, among other reasons:
The latest economic figures released by the Australian Bureau of Statistics (ABS) have fuelled the debate on the future of the Australian economy and prompted many to ask, “Will Australia go into a recession?”
This question is legitimate, but off the mark. In fact, the data tells us that we should not be worried about going into recession.
What we should worry about instead is how to get out of the recession. Because, like it or not, the recession is already here and the sooner we acknowledge the problem, the sooner we can start the recovery.
