Identifier
Created
Classification
Origin
08CANBERRA1208
2008-12-02 20:46:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Canberra
Cable title:
AUSSIE RESERVE BANK AGAIN SLASHES INTEREST RATES
how-toVZCZCXRO4299 RR RUEHPT DE RUEHBY #1208 3372046 ZNR UUUUU ZZH R 022046Z DEC 08 FM AMEMBASSY CANBERRA TO RUEHC/SECSTATE WASHDC 0604 INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC RUEATRS/DEPT OF TREASURY WASHINGTON DC RUEHDN/AMCONSUL SYDNEY 4014 RUEHBN/AMCONSUL MELBOURNE 5804 RUEHPT/AMCONSUL PERTH 4074 RUEHWL/AMEMBASSY WELLINGTON 5541
UNCLAS CANBERRA 001208
SENSITIVE
SIPDIS
STATE FOR EEB AND EAP/ANZ
TAGS: EFIN ECON AS
SUBJECT: AUSSIE RESERVE BANK AGAIN SLASHES INTEREST RATES
REF: A) Canberra 1036; B) Canberra 1076; C) Canberra 1114
UNCLAS CANBERRA 001208
SENSITIVE
SIPDIS
STATE FOR EEB AND EAP/ANZ
TAGS: EFIN ECON AS
SUBJECT: AUSSIE RESERVE BANK AGAIN SLASHES INTEREST RATES
REF: A) Canberra 1036; B) Canberra 1076; C) Canberra 1114
1. (U) Summary. On December 2, the Reserve Bank of Australia (RBA)
announced a 100 basis points reduction in the cash rate to a record
low of 4.25 per cent. RBA continues to prioritize demand ahead of
inflation. End summary.
RBA SLASHES RATES AGAIN
2. (U) The RBA today slashed the official cash rate 100 basis
points, to 4.25 per cent, tying a record low. In his statement, RBA
Governor Glenn Stevens cited fragile financial market sentiment,
further drops in commodity prices, weak economic conditions in major
countries, and significant slowing in many emerging countries (i.e.,
China). While the Australian economy has been resilient, recent
data shows a significant moderation in demand and activity - for
example, earlier this week a key index of manufacturing fell for the
sixth consecutive month to a fresh low, and all 12 manufacturing
sectors declined.
3. (SBU) The RBA has been aggressive in easing monetary policy,
slashing the cash rate target 300 basis points since early
September. This plus the spending package which goes into effect
next week is a big attempt to boost demand over the year ahead. The
RBA maintains its 2-3 per cent inflation target but since September
has given a clear priority to bolstering demand.
4. (SBU) Comment: Again, initial reactions from economists,
industry, and consumer groups to the RBA move were uniformly
positive. Reductions in the official cash rate reach borrowers
quickly in Australia, where most mortgages are adjustable.
Australia's major banks have already announced cuts in mortgage
interest rates of 80-100 basis points, putting A$193 a month back in
the pocket of a holder of a typical A$300,000 mortgage. The RBA's
continued aggressive policy response aims to make the looming
recession less deep than otherwise. More interest rate cuts are
likely next year, with some analysts seeing them going as low as 3
per cent. End comment.
MCCALLUM
SENSITIVE
SIPDIS
STATE FOR EEB AND EAP/ANZ
TAGS: EFIN ECON AS
SUBJECT: AUSSIE RESERVE BANK AGAIN SLASHES INTEREST RATES
REF: A) Canberra 1036; B) Canberra 1076; C) Canberra 1114
1. (U) Summary. On December 2, the Reserve Bank of Australia (RBA)
announced a 100 basis points reduction in the cash rate to a record
low of 4.25 per cent. RBA continues to prioritize demand ahead of
inflation. End summary.
RBA SLASHES RATES AGAIN
2. (U) The RBA today slashed the official cash rate 100 basis
points, to 4.25 per cent, tying a record low. In his statement, RBA
Governor Glenn Stevens cited fragile financial market sentiment,
further drops in commodity prices, weak economic conditions in major
countries, and significant slowing in many emerging countries (i.e.,
China). While the Australian economy has been resilient, recent
data shows a significant moderation in demand and activity - for
example, earlier this week a key index of manufacturing fell for the
sixth consecutive month to a fresh low, and all 12 manufacturing
sectors declined.
3. (SBU) The RBA has been aggressive in easing monetary policy,
slashing the cash rate target 300 basis points since early
September. This plus the spending package which goes into effect
next week is a big attempt to boost demand over the year ahead. The
RBA maintains its 2-3 per cent inflation target but since September
has given a clear priority to bolstering demand.
4. (SBU) Comment: Again, initial reactions from economists,
industry, and consumer groups to the RBA move were uniformly
positive. Reductions in the official cash rate reach borrowers
quickly in Australia, where most mortgages are adjustable.
Australia's major banks have already announced cuts in mortgage
interest rates of 80-100 basis points, putting A$193 a month back in
the pocket of a holder of a typical A$300,000 mortgage. The RBA's
continued aggressive policy response aims to make the looming
recession less deep than otherwise. More interest rate cuts are
likely next year, with some analysts seeing them going as low as 3
per cent. End comment.
MCCALLUM