Australia’s central bank kept interest rates unchanged at 3.25% Tuesday amid a nascent improvement in China’s economy, the country’s biggest trade partner, and accelerating inflation pressures at home.
Most economists had expected a quarter-point cut to 3.0% due to concern over growth in Australia’s resource-rich economy. Falling prices for industrial commodities such as iron ore and coal last month prompted the Australian government to lower its expectations for growth over the coming year, and the central bank has signaled it may make even steeper downgrades to its forecasts in a policy statement due on 9 November.
Chinese manufacturing grew for the 1st time in 3 months in October to above the threshold that signals expansion, raising hopes the world’s 2nd-largest economy is regaining momentum.
Australian inflation in Q-3 was slightly higher than expected, warranting some caution from the RBA, which has agreed to keep inflation in a 2% to 3% band. The central bank said Tuesday it still expects inflation to be ” consistent with the target” over the next 1 or 2 yrs.
The RBA is increasingly betting that as a mining-investment boom fades next year, other areas of the economy such as housing will help keep growth on track.
Paul A. Ebeling, Jnr.Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.
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