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Australian central bank hikes policy rate to 4%
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pharoah88
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02-Mar-2010 17:43
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With Interest Rate @4% AUD/USD should RiSE back to USD0.930~0.950 level. |
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nickyng
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02-Mar-2010 12:48
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By Myra P. Saefong, MarketWatch
TOKYO (MarketWatch) -- The Reserve Bank of Australia raised its policy
rate by a quarter point to 4.0%, as expected, marking the central banks'
fourth rate increase in five meetings after last month's surprise
decision to stand pat.
Greek Bailout Won't Solve Euro-Zone VulnerabilityInvestors are showing in the markets their lack of faith in the euro zone, looking to the ECB for low rates for a long period and loose liquidity conditions as structural weakness drags on growth prospects. Immediately following the rate decision, the Australian dollar weakened to trade at 89.80 U.S. cents, down from 89.94 U.S. cents before the announcement. The S&P/ASX 200 traded near the session's lows, though still up 0.1%. 1.60 1.40 1.20 1.00 M A M J J A S O N 10 F "In Australia, economic conditions in 2009 were stronger than expected, after a mild downturn a year ago," Stevens said. "The rate of unemployment appears to have peaked at a much lower level than earlier expected." But "credit conditions remain difficult in some major countries as banks continue to face loan losses associated with the period of economic weakness," he said. "Concerns regarding some sovereigns remain elevated." The RBA had left its policy rate unchanged at the last meeting on Feb. 2 after a string of increases at the previous three meetings. See story on Feb. 2 rate decision. "With the risk of serious economic contraction in Australia having passed, the board moved late last year to lessen the degree of monetary stimulus that had been put in place when the outlook appeared to be much weaker," Stevens said in his statement Tuesday. The RBA's decision comes after comments on central bank interest rates made by the International Monetary Fund's deputy managing director at the Australian Bureau of Agricultural and Resource Economic annual conference in Canberra. During the conference, the IMF's Murilo Portugal said most central banks should keep interest rates low as global economies experience benign core inflation and high unemployment, according to a report from Dow Jones Newswires. "Macroeconomic policy stimulus should be maintained until private demand is self-sustaining," Portugal was cited as saying. He also said that broad economic factors, such as high public debt, could pose a threat to Australia and a broader global recovery, the Dow Jones report said. |
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