Business

Australia central bank holds interest rates steady until at least February

Published

5 months ago

December 5, 2023

admin

Australia central bank holds interest rates steady until at least February

Australia’s central bank held interest rates steady on Tuesday as expected, buying it more time to assess the state of the economy and decide whether to tighten further next year even as the US and Europe are seen as almost certain to ease.

Wrapping up its December policy meeting, the Reserve Bank of Australia (RBA) kept rates at a 12-year high of 4.35 per cent, adding economic data received since November – when it hiked by a quarter-point – had been broadly in line with expectations.

Markets had wagered heavily on a steady outcome given inflation had eased a little more than expected in October. They slightly pared back the chance of a further rise to 4.6pc in the new year to 38pc from 43pc before the no-change decision.

The local dollar extended earlier declines to be down 0.6pc to $0.6581 and three-year Australian government bond yields eased 5 basis points to 4.00pc.

“Holding the cash rate steady at this meeting will allow time to assess the impact of the increases in interest rates on demand, inflation and the labour market,” RBA Governor Michele Bullock said.

Bullock also stuck with the watered down tightening bias from last month, saying whether further rate hikes are required would depend upon the data and the evolving assessment of risks.

It was the RBA’s last chance to raise rates before its next meeting in February and provided Christmas relief to mortgage holders, many of whose monthly payments have jumped by more than A$1,000 ($662) a month amid elevated costs of living.

“The statement, in our view, was less hawkish than November’s and also less hawkish than we expected,” Barclays analysts said in a note to clients.

“We continue to think the hiking cycle is over, though we do note the bank’s data dependent approach means the possibility of another hike after the Q4 inflation print.” Those figures are due in late January, ahead of the next RBA meeting on Feb 6.

Bullock has sounded hawkish in recent public comments, warning that inflation has become increasingly driven by domestic demand, requiring a more “substantial” response from interest rates.

At present, inflation is not forecast to return to the bank’s 2pc to 3pc target until late 2025.

LIMITED INFORMATION

The RBA saw the monthly inflation report for October, which fell by more than expected, as insufficient to provide an update on services. It expects wages, which rose at a record pace last quarter, to ease from here, and the labour market remains tight despite signs of easing.

Rates have now risen by 425 basis points since May last year in the most aggressive cycle on record, but the size of hikes has lagged its overseas counterparts because of the central bank’s attempt to preserve jobs gains.

“I think their hope would be that the November hike has stamped out some of those inflation concerns at least in the short term. And really the global story too probably works in their favour,” said Madeline Dunk, an economist at ANZ.

Markets are expecting early and aggressive rate cuts from the US Federal Reserve and the European Central Bank in 2024, with more than 100 basis points priced in, while wagering the RBA could just cut by 15 basis points late next year.

“If we see a continuing momentum over there (Fed rate cuts), it does support the case that they can be done at 4.35pc. But I think they would want to keep the option open just in case,” Dunk said of the RBA.

Post Views: 116

Business

Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

Published

1 hour ago

May 17, 2024

admin

Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

A notable Chinese company has expressed keen interest in expanding its investment in Pakistan, in yet another sign of investor confidence boost in the leadership of Prime Minister Shehbaz Sharif.

A delegation from Chinese firm MCC Tongsin Resources led by its Chairman Wang Jaichen called on PM Shehbaz here on Friday.

The premier invited the Chinese company to invest in Pakistan’s mining sector and manufacturing of export goods.

Shehbaz assured the delegation that his government would extend all-out facilitation to the company from minerals exploration and processing to the export of goods.

The PM instructed the relevant federal ministers and officers to continue consultation with the Chinese firm, taking the Balochistan chief minister, provincial departments and stakeholders on board.

The delegates reposed trust in PM Shehbaz’s leadership, and expressed keen interest in enhancing their investment in Pakistan’s mining and minerals sectors.

The delegation briefed Prime Minister Shehbaz about the construction of a mineral park in Pakistan and their future investment plans.

The premier welcomed the Chinese firm and highlighted the priority steps by his government to promote foreign investment in Pakistan.

He said that being a time-tested friend, China supported Pakistan in every difficult hour for which the Pakistani nation was grateful to the leadership and people of China.

Federal ministers Ahad Khan Cheema, Dr Musaddik Malik, Rana Tanveer Hussain, Jam Kamal Khan and relevant senior officers attended the meeting.

Post Views: 6

Business

Govt jacks up power price by Rs1.47 per unit

Published

2 hours ago

May 17, 2024

admin

Govt jacks up power price by Rs1.47 per unit

The government on Friday increased the electricity tariff by Rs1.47 per unit.

According to Nepra sources, the collection from consumers will take place in August, September, and October.

The electricity companies had requested the funds as part of the third quarter adjustment for 2023-2024, seeking Rs 31.34 billion under capacity charges.

Sources said that Rs5.57 billion were requested for operation and maintenance costs, and Rs12.38 billion were requested for the transmission and distribution impact under monthly fuel cost adjustment.

Previously, Nepra had completed the hearing on the electricity companies’ request under the quarterly adjustment.

Nepra approved the Power Division’s request, allowing an increase of Rs 1.45 per unit in electricity prices.

Post Views: 12

Business

Hong Kong allows China’s digital yuan to be used in local shops

Published

2 hours ago

May 17, 2024

admin

Hong Kong allows China's digital yuan to be used in local shops

Hong Kong will allow mainland China’s pilot digital currency to be used in shops in the city, the head of its de facto central bank said on Friday, marking a step forward for Beijing’s efforts to internationalise the yuan amid rising geopolitical tensions.

The programme, backed by Beijing, will allow mainland Chinese and Hong Kong residents to open digital yuan wallets via a mobile app developed by China’s central bank and will permit them to make payments in retail shops and some online stores in Hong Kong and in mainland China.

Transactions using e-CNY, predominantly for domestic retail payments in China, hit 1.8 trillion yuan ($249.27 billion) as of end of June 2023, with 120 million digital wallets opened, according to the latest disclosure from China’s central bank.

Using the wallet, users can make payments at over 10 million merchants in 17 provinces and cities in the mainland.

Each wallet used in the city will be subject to a balance limit of 10,000 yuan, with single transactions and daily payments capped at 2,000 yuan and 5,000 yuan, respectively, officials from the Hong Kong Monetary Authority said.

Peer-to-peer transfers will not be allowed at the moment, according to the HKMA.

“By expanding the e-CNY pilot in Hong Kong .. users may now top up their wallets anytime, anywhere without having to open a mainland bank account, thereby facilitating merchant payments in the mainland by Hong Kong residents,” HKMA Chief Eddie Yue said.

Currently, users of other digital yuan wallets such as those operated by Ant Group and Tencent can make payments in the city.

Industrial and Commercial Bank of China, Bank of China Ltd, China Construction Bank Corp and Bank of Communications Co have been selected as e-CNY wallet operators.

The yuan’s use in global finance remains low, though it has shown steady increases.

Post Views: 8