The minutes from the Reserve Bank of Australia’s meeting earlier this month have revealed that interest rates will be lifted if the economy begins to recover as per official forecasts, but the bank said it is still unclear whether the economy is surviving due to fiscal stimulus or low interest rates.
“A particular source of uncertainty was whether the recent growth in household spending was due mainly to fiscal measures, in which case it would probably soon fade, a more general decline in risk aversion, or the more persistent effects of lower interest rates,” the RBA said in the minutes for its last policy meeting.
“If the economy evolved as anticipated in the forecasts, the Bank would in due course need to adopt a less expansionary policy stance,” it said.
The RBA board also dismissed the need for further interest rates, saying “it now appeared unlikely this would be necessary”.
The Australian Competition and Consumer Commission is taking action against middle-eastern airline Emirates for allegedly engaging in price fixing in the air cargo industry.
The ACCC alleges that between 2002 and 2006, Emirates entered into arrangements or understandings with other international air cargo carriers that had the purpose and effect of fixing the price of certain fuel surcharges, security surcharges and rates that were applied to air cargo carried by Emirates and other airlines,” it said in a statement today.
“The ACCC alleges that the arrangements or understandings were reached in countries including Singapore, Indonesia, Hong Kong, United Arab Emirates and India.”
The ACCC is seeking declarations, injunctive relief, pecuniary penalties and costs, with a directions hearing set for 11 September in the Federal Court in Sydney.
The Australian share market has opened lower today after disappointing results overnight on Wall Street, where economic data from Japan gave little hope for a speedy recovery.
The benchmark S&P/ASX200 index was down 7.8 points or 0.17% to 4381 at 12.00 AEST. The Australian dollar also lost ground to US82c.
ANZ shares gained 0.4% to $20.34, while Commonwealth Bank shares gained 0.1% to $45.35. Westpac shares lost 0.4% to $23.78, as NAB lost 0.3% to $26.99, as it announced it will buy the mortgage management vision of Challenger Financial Services.
The deal will go ahead for $385 million, along with a portfolio of $4 billion worth of residential mortgages. It will also include the PLAN, Choice and FAST mortgage aggregator businesses.
“As I have said previously we will take advantage of compelling opportunities to enhance our organic growth capabilities,” NAB chief executive Cameron Clyne told Reuters.
Building materials company James Hardie Industries NV has recorded a $US77.9 million first quarter net loss, but says the US construction market will recovery soon enough.
“While the US residential construction market appears to be ‘nearing the bottom’ it remains too early to ascertain the timing, rate or extent of any potential recovery,” chief executive Louis Gries said in a statement.
“Our priority remains to ensure that the company is positioned to drive its long-term strategy, sustain earnings in a low demand environment, and retain the operational flexibility to increase utilisation of capacity when a recovery eventuates.”
Meanwhile, in the US, Wall Street suffered its worst losses in seven weeks due to soft economic data from Japan. Although Japan announced it has escaped a recession, its weak GDP figures gave little hope to investors.
Additionally, shares in retailer Lowe’s dropped by 10.3% after it announced a 19% annual drop in profits.
The Dow Jones Industrial Average fell 186.06 points, or 2%, to 9135.34.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
