Aussie central bank shifts policy towards rate cut

  • Business
  • Saturday, 07 Jun 2003

MELBOURNE: Australia’s central bank said yesterday it may follow its peers in cutting interest rates if the global economy did not improve, shifting to an easing bias from a neutral stance in place since last November. 

In a surprisingly direct statement, Reserve Bank of Australia (RBA) governor Ian Macfarlane said that the global economy had not picked up in the way the bank had hoped, prompting him to lower his forecast for Australian gross domestic product (GDP) growth to 3% in calendar 2003 from an earlier prediction of 3.75%. 

The European Central Bank and the Reserve Bank of New Zealand had reduced their key rates this week. 

And US Federal Reserve chairman Alan Greenspan said that it may be wise to lower interest rates as insurance against deflation. 

In Australia, data this week showed annual growth slipped below 3% for the first time since 2001 as exports slumped. 

“Over the last six months, not just here but everywhere else, the situation has changed and what we are really talking about is whether interest rates stay the same or whether they go down,” Macfarlane said. – Reuters  

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