Australia / Reserve Bank Cuts Key Rate to Match Half-Century Low

The Reserve Bank of Australia cut its benchmark interest rate to the half-century low set during the 2009 global recession as hiring falters and an elevated currency hurts industries such as manufacturing and tourism.

Governor Glenn Stevens and his board reduced the overnight cash-rate target by a quarter percentage point to 3 percent, the central bank said in a statement in Sydney today. The sixth cut in the past 14 months was predicted by 20 of 28 economists surveyed by Bloomberg. The rate matches the level reached from April-October 2009 that was the lowest since 1960.

In his statement, Stevens said the local dollar remains “higher than might have been expected” given lower export prices and a weaker global outlook. His decision to ease the highest policy rate among major developed economies reflects Australia’s contained wage pressure, lower projected mining spending and an unemployment rate at a 2 1/2-year high.

“The cut is an attempt to smooth the transition from resources to the broader sectors of the economy that are currency and interest-rate sensitive,” said Martin Whetton, interest-rate strategist for Australia at Nomura Holdings Inc. in Sydney. “There feels like there’s a level of frustration in the statement about the currency.”

Choosen excerpts by Job Market Monitor from

via RBA Cuts Key Rate to Match Half-Century Low as Currency Holds Up – Businessweek.