Bet on more RBA interest rate cuts
03/02/09 04:23 PM
THE Reserve
Bank has painted a grim picture of the economy,
with the confidence of consumers smashed by the
shocking global downturn.
However, as the central bank keeps in place one of the deepest cutting cycles in recent history, Glenn Stevens is still keen to point out that the full pain of the world chaos has still escaped Australia.
The cuts to interest rates, and the resulting mortgage rate reductions, have softened some of the damage. Still, the outlook is not bright.
The budget deficit is now estimated to be $22.5 billion for the current financial year, a black hole that represents 1.9 per cent of GDP. It was not that long ago that government's target was to keep the surplus at that size.
However, as the central bank keeps in place one of the deepest cutting cycles in recent history, Glenn Stevens is still keen to point out that the full pain of the world chaos has still escaped Australia.
The cuts to interest rates, and the resulting mortgage rate reductions, have softened some of the damage. Still, the outlook is not bright.
The budget deficit is now estimated to be $22.5 billion for the current financial year, a black hole that represents 1.9 per cent of GDP. It was not that long ago that government's target was to keep the surplus at that size.
Now the onus
is falling to the Government to spend the economy
out trouble.
The Government's mammoth $42 billion National Building and Jobs Plans is expected to provide about 0.75 per cent to 1 per cent of GDP growth in the next year, on top of 90,000 new jobs.
Mr Stevens, in a statement accompanying the 100 basis point cut today, said the decision took into account the Government's spending package.
“Economic conditions in Australia have also been affected, though less than in other advanced economies,” Mr Stevens said.
Full Story
The Government's mammoth $42 billion National Building and Jobs Plans is expected to provide about 0.75 per cent to 1 per cent of GDP growth in the next year, on top of 90,000 new jobs.
Mr Stevens, in a statement accompanying the 100 basis point cut today, said the decision took into account the Government's spending package.
“Economic conditions in Australia have also been affected, though less than in other advanced economies,” Mr Stevens said.
Full Story