The results of the most recent monthly business survey conducted by Australian banking major NAB makes it clear that the economy is operating at two speeds, with the mining sector leaving the rest of the economy in its wake. Overall, though, the economy is merely limping by.
Apart from a dip during the first couple of months, due to natural disasters hitting eastern Australia, the NAB index of business conditions hit its lowest level in May since early 2009, when the economy was still dealing with the aftermath of the global financial crisis.
When the Reserve Bank of Australia meets next week, it is likely to spare the Australian consumer from yet another interest rate hike, however the central bank is more than likely to raise interest rates soon, and do so more than once before the year is out.
Eleven economists polled by the APP news agency all said they believed that the RBA would maintain the cash rate at 4.75 per cent when it meets to decide policy on Tuesday.
Just over ten years ago, Australia’s central bank the RBA sold off most of the countries gold reserves under the belief that the price of gold would continue to remain flat, and that as an asset, it would no longer play any role in the future financial system, or any crises that may result.
Based on the current market price of $1,400 an ounce for gold, the decision to sell 167 tonnes of the precious metal by the central bank has cost Australia approximately $5 billion.
Despite multiple rate rises enacted by the Australian central bank, Last year November retail sales still managed to grow, all be it marginally by 0.3 per cent, which was in line with expectations.
According to the latest data released by the Australian Bureau of Statistics (ABS), November retail sales increased to a seasonally adjusted $20.328 billion, after a revised 0.8 per cent decline during October.
According to the minutes of the most recent board meeting of the Reserve Bank of Australia, the decision by the central bank to hold interest rates steady was driven by restrain in both household consumption and borrowing.
The notes from the meeting however failed to indicate the central bank’s bias on interest rate policy over the next few months and only suggests that the RBA was content with the current interest rate level.
Mike Smith, chief executive of Australian banking major ANZ is the latest banking chieftain to rail against bank bashing, once again justifying ANZ’s interest rate policy as one being driven by the “permanently higher” costs of doing business.
Mr. Smith made his comments during the lenders annual general meeting last week and followed similar comments made by ANZ chairman John Morschel who defended ANZ’s decision to lift its interest rates by 120 basis points over and above official interest rate rises since the start of the global financial crisis.
ANZ chairman John Morschel says that he believes that Australia’s economic recovery is set to be as volatile as anything in the United States and Europe.
Mr. Morschel made his comments during the lenders annual general meeting and added that issues stemming from global financial crisis would continue to resonate throughout the global economy.
As interest rates have steadily risen over the last year, new data shows that ordinary Australians are saving the most they ever have in two decades. Economists attribute the trend to being as a result of consumer concern over the direction of interest rates and the future trajectory of the economy.
National income accounts data which was released on Wednesday shows that growth of the Australian economy slowed down during the September, expanding by a moribund 0.2 per cent, the slowest recorded level since the end of 2008, when the financial crisis was at its greatest, and the fifth slowest recorded growth rate since 2000.
Federal Treasurer Wayne Swan has dismissed demands by the Coalition opposition for re-regulation of interest rates as being “absurd”. Not all Coalition MP’s are united in their support of such measures, with one Liberal suggesting the idea came from the “lunatic fringe” before being made aware that it came from within his own party.
Not all Coalition MP’s are united in their support of such measures, with one Liberal suggesting the idea came from the “lunatic fringe” before being made aware that it came from within his own party.
The Australian central bank released the minutes of its last board meeting which reveal that it does not intend to wait indefinitely before it raises the cost of borrowing again.
The Reserve Bank of Australia chose to hold interest rates steady when it met at the start of the month as it sought more data, however, according to the minutes of the meeting, the argument was made for tightening interest rates.