Wednesday, October 10, 2012

Australia's RBA mulls new growth drivers

A top Australian central bank official said Tuesday that the resource-rich nation will need to find new drivers of growth as a mining investment boom that has underpinned the economy is fading. 

"With the peak in mining investment now coming into view, it is not surprising that attention is turning to the question of what forms of activity might pick up, where the future jobs might come from, and what combination of interest rates and exchange rates might keep the overall economy on an even keel," Reserve Bank of Australia Deputy Governor Philip Lowe said at a conference in Hobart. 

In May, Mr. Lowe referred in a speech to a "once-in-a-century boom in mining investment". But the industry is now feeling the pain of weakening global demand as Europe's woes play out and China's economy slows. In recent weeks, mining companies have scrapped big investment plans, shuttered mines and laid off thousands of workers. 

The RBA last week surprised economists by cutting its benchmark lending rate by 0.25 percentage point to 3.25%, a level last seen in late 2009, reacting to declines in commodity prices and slowing growth. Most economists had expected no change. 

It now expects the peak in resource investment to occur next year, possibly at a lower level than earlier expected. 

Mr. Lowe said Tuesday that concerns about world growth and signs the country's job market has softened recently prompted last week's cut in interest rates. 

"Given the outlook for contained inflation, the board judged at its meeting last week that it was appropriate for the stance of monetary policy to be a little more accommodative," Mr. Lowe said. 

No comments:

Post a Comment