The Reserve Bank of Australia’s Deputy Governor, Ric Battellino, has said it is too early to determine whether measures taken to boost the global economy have worked.
“As with normal monetary policy, the impact of these various unconventional measures is likely to take quite some time to become apparent,” Battellino said at the 2009 Securities and Derivatives Industry Association conference in Sydney.
But Battellino defended measures taken by the world’s central banks, saying decisions to lower interest rates can always be reversed if inflation becomes rampant.
“Their argument is that central banks will be too slow to reverse the various measures,” he said. “As there are no technical factors that would prevent or slow the reversal of recent measures – they can be reversed simultaneously or in any sequence – the argument must rest on central banks making incorrect policy judgments.”
The Australian share market opened lower today after negative leads from Wall Street, due to fears that automaker General Motors is closer to bankruptcy.
The benchmark S&P/ASX200 index dropped 45.4 points (or 1.19%) to 3,755.7 at 11.36 AEST. The Australian dollar also suffered a fall, moving back to 77 US cents.
AMP shares lost 2.2% to $4.82, with ANZ also losing 1.7% to $15.31. Westpac lost 1.6% to $18.49; while NAB dropped 1.1% to $21.50 as news emerged the bank will face a $200 million lawsuit.
The class action, launched by law firm Maurice Blackburn, concerns an alleged delay over writing down $1.2 billion worth of collateralised debt obligations.
The legal team says that NAB allegedly failed to disclose the true value of 10 CDOs held by nabCapital.
A Maurice Blackburn spokesperson told AAP that there is a 12 June deadline for shareholders who purchased shares between 1 January 2008 and 25 July 2008 to register interest.
Meanwhile, Qantas chief executive, Alan Joyce said that the airline will ride out the rest of the recession without any further job cuts or capital raisings.
“We have built up our cash balances and our plans going forward have deferred capital expenditure,” he told reporters. “We have used those other mechanisms to make sure that Qantas has sufficient balance-sheet strength to get through our view of the current environment.”
Meanwhile, the Australian Council of Trade Unions is proposing the Government lifts restrictions on pattern bargaining, strikes and adopts a national charter of union rights.
The national charter would force companies to pay workers while conducting union activities.
“These rights should not have to be bargained,” the new policy reads. “They should be universally accepted rights in a decent society.”
Overseas, the United Nations updated its global economic growth forecast for 2009, now saying it expects a drop of 2.6% compared to its prior prediction of 0.5%.
“The global credit crunch has continued straining the real economy worldwide,” the World Economic Situation and Prospects 2009 report said.
“If financial markets do not unclog soon, and if the fiscal stimuli do not gain sufficient traction, the recession would prolong in most countries with the global economy stagnating at lower welfare levels well into 2010.”
Also in New York, Wall Street fell on fears that General Motors is edging closer into bankruptcy. The Dow Jones Industrial Average fell 173.47 points or 2.05% to 8,300.02.