The Reserve Bank says it has room to cut interest rates further to support the economy in the face of falling commodity prices, the high Australian dollar and weaker global growth.
The minutes of the Reserve Bank of Australia’s September 4 meeting published today show the central bank decided to keep the cash rate on hold at 3.5% despite concerns about falling iron ore and coal prices and the high value of the Australian dollar.
However, it said the current inflation outlook, which is expected to remain within the RBA’s target range of 2-3% through to 2013, meant it had room to cut rates again if necessary.
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“The current assessment of the inflation outlook continued to provide scope to adjust policy in response to any significant deterioration in the outlook for growth,” the RBA said.
“At this meeting, the board judged that, with inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the stance of monetary policy remained appropriate.”
Government establishes retirement savings scheme with New Zealand
The Federal Government has released draft legislation to establish a trans-Tasman retirement savings portability scheme.
The governments of Australia and New Zealand have signed an arrangement to permit Australians and New Zealanders to transfer their retirement savings when they move between Australia and New Zealand, while preserving the integrity of the retirement savings systems of both countries.
Under the scheme, Australians and New Zealanders will be able to transfer their superannuation benefits between certain Australian superannuation funds and New Zealand KiwiSaver schemes.
Shares flat on weak offshore leads
The Australian sharemarket has opened lower this morning following a weak lead from offshore markets.
The benchmark S&P/ASX200 index was down 10 points or 0.2% to 4,392.4 at 12.10 AEST, while the Australian dollar remained steady at $US1.05.
Fortescue scores $4.3 billion debt lifeline
Fortescue Metals has won a $4.3 billion lifeline to pay its debts, with its repayments now extended beyond November 2015.
The company’s shares rose 17% to $3.50 after the announcement.
“This facility will be used to refinance all existing bank facilities and provide Fortescue with additional liquidity,” the company said.
“The facility extends the earliest repayment date for any of the company’s debt to November 2015 and removes financial maintenance covenants which applied under previous facilities,” the company said, noting that Credit Suisse and JP Morgan both signed a full underwriting commitment for the facility that provided “funding certainty to Fortescue”.