RBA Running Out of Room to Cut Rates, Australia’s Robb Says

RBA Running Out of Room to Cut Rates, Australia’s Robb Says

Australia’s central bank is running out of room to implement emergency stimulus measures should they be needed with interest rates now at historical lows, Shadow Finance Minister Andrew Robb said. The central bank doesn’t have “a lot of room left if there was some other unforeseen event in the world economy to make a difference,” Robb, whose Liberal-National coalition is on track to win government at the Sept. 7 election, said in an interview with Bloomberg Television today. “The Reserve Bank has been relied upon, or pressured, to do the heavy lifting in the economy for the last few years.”Robb’s Liberal-National coalition, helmed by Tony Abbott, and Kevin Rudd’s governing Labor Party are vying for stewardship of the world’s 12th-biggest economy amid slowing growth and rising joblessness. RBA Governor Glenn Stevens, who will announce the central bank’s monthly monetary policy decision today, has cut rates by 2.25 percentage points since November 2011 to a record-low 2.5 percent.

Stevens will keep Australia’s benchmark rate at 2.5 percent in his announcement scheduled for 2:30 p.m. Sydney time, according to all 32 economists in a Bloomberg News survey.

The Treasury said Aug. 13 the budget deficit will widen as growth slows and unemployment rises to 6.25 percent by mid next year, from 5.7 percent in July. Government debt will peak at A$370 billion in April 2016, the Treasury projected. The opposition is vowing to cut red tape, reduce company taxes by 1.5 percentage points to 28.5 percent and abolish levies on mining profits and carbon emissions should it win power.

“We’ve got to restore an appetite for risk and investment in Australia,” Robb said. “It’s been snuffed out in many respects the last year or two with the overhang of all this debt and the regulations that have been imposed.”

The opposition led Labor 54 percent to 46 percent on a two-party preferred basis, according to a Newspoll published in the Australian newspaper yesterday. The coalition is in a “healthy condition” to win the election, Robb said.

To contact the reporters on this story: Jason Scott in Canberra at jscott14@bloomberg.net; Susan Li in Hong Kong at sli31@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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