Australia and natural resoures, FT
The Australian central bank has cut rates by 25bps in a move widely expected as the mineral-rich nation combats a burgeoning slowdown.
The bank writes in a statement accompanying the decision:
In Australia, the economy has been growing a bit below trend over the past year. This is expected to continue in the near term as the economy adjusts to lower levels of mining investment. The unemployment rate has edged higher.
Last Friday, the treasurer said that the budget deficit would hit A$30bn this fiscal year, twice as wide as formerly predicted. The country, he said at the time, faces the tough challenge of transitioning away from its recent reliance on the growth of the mining sector. The commodities boom had in recent years so boosted the Aussie dollar that other export industries, notably manufacturing and tourism, had fallen on hard times.
Interest rates were already at record lows and the AUD this week hit a three-year low, but, as economists at Moody's wrote before the decision, "a little more juice is needed to insulate against mining investment peaking later in 2013."
