Rate cuts on hold but Rudd warns we're not out of trouble yet
04/03/09 03:26 PM
A vote of
confidence from the Reserve Bank yesterday has
failed to quell Government fears of a sharp
economic downturn when official growth figures are
released today.
Calling a halt to six months of interest rate cuts, the central bank left the 3.25 per cent cash rate unchanged, preferring to assess the impact of previous cuts and the Government's stimulus measures before moving again.
While welcoming the Reserve's decision as evidence the previous measures had been effective, the Government insulated itself in case today's gross domestic product figure for the December quarter is negative, which would be the first time in seven years.
Calling a halt to six months of interest rate cuts, the central bank left the 3.25 per cent cash rate unchanged, preferring to assess the impact of previous cuts and the Government's stimulus measures before moving again.
While welcoming the Reserve's decision as evidence the previous measures had been effective, the Government insulated itself in case today's gross domestic product figure for the December quarter is negative, which would be the first time in seven years.
These fears
were compounded by news that Canada's economy had
contracted by 0.8 per cent in the December quarter.
Canada's economy is similar to Australia's as it is
also heavily dependent on commodity exports.
The Prime Minister, Kevin Rudd, cautioned that Australia was one of only four OECD countries not to be in recession or to have had a quarter during which the GDP shrank because of the global crisis.
"It becomes harder and harder for Australia to single-handedly resist the global economic tide but we will continue to give it all that we have got," he said.
The Treasurer, Wayne Swan, concurred, saying "the largest synchronised downturn in the global economy in our lifetime" would have a dramatic impact, especially on the results for the December quarter.
A period of two successive quarters in which the GDP shrinks is known as a technical recession.
Anticipating Opposition attacks, Mr Rudd and his Treasurer stressed that today's figure - whatever it is - would be worse had there been no $10.4 billion stimulus package in December.
A surge in exports in the last three months of last year raised hopes among economists that the December quarter would be in the black.
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The Prime Minister, Kevin Rudd, cautioned that Australia was one of only four OECD countries not to be in recession or to have had a quarter during which the GDP shrank because of the global crisis.
"It becomes harder and harder for Australia to single-handedly resist the global economic tide but we will continue to give it all that we have got," he said.
The Treasurer, Wayne Swan, concurred, saying "the largest synchronised downturn in the global economy in our lifetime" would have a dramatic impact, especially on the results for the December quarter.
A period of two successive quarters in which the GDP shrinks is known as a technical recession.
Anticipating Opposition attacks, Mr Rudd and his Treasurer stressed that today's figure - whatever it is - would be worse had there been no $10.4 billion stimulus package in December.
A surge in exports in the last three months of last year raised hopes among economists that the December quarter would be in the black.
Full Story