Australia seeks economic stimulus
Australia was set to rejoin the list of nations seeking to shore up battered economies with stimulus packages and more aggressive rate cuts after reporting its biggest drop in prices in more than a decade yesterday. Policymakers warned of the dangers...
Australia was set to rejoin the list of nations seeking to shore up battered economies with stimulus packages and more aggressive rate cuts after reporting its biggest drop in prices in more than a decade yesterday.
Policymakers warned of the dangers of the global recession, stemming from the financial crisis that has already cost trillions of dollars and millions of jobs, after a 0.3 per cent fall in the consumer price index, the biggest since late 1997.
The Australian data came a day after US President Barack Obama tried to allay deep scepticism among opposition lawmakers over his $825 billion-plus stimulus plan and Britain, Japan and Canada also sought to reinvigorate shrinking economies.
Benchmark US 10-year treasuries rose in Asian trading on hopes that the Federal Reserve would move closer to buying long-dated government bonds to lower borrowing rates, a move seen as vital to stabilising the recession-hit US economy.
In Australia, analysts said another bold easing in monetary policy was almost certain when the Reserve Bank of Australia holds its next monthly meeting on Tuesday.
"The deepest global recession in 70 years will kneecap the Australian economy, slash national income and see the RBA deliver what should be amazingly stimulatory monetary policy," said TD Securities senior strategist Joshua Williamson.
Investors see a cut of at least 75 basis points in the 4.25 per cent cash rate. The central bank has already slashed interest rates by three percentage points since September.
The centre-left Labour government is also widely expected to announce, in a week or two, another stimulus plan after priming the pumps in December with a A$10 billion (€5.03 billion) package.
Treasurer Wayne Swan did not give a direct answer when pushed on the timing of a possible second package, but said the government was determined to stay "ahead of the game".
A conga line of governments around the world has spent hundreds of billions of dollars on bank bailouts and fiscal stimulus ,and central banks have slashed interest rates to record lows since a US housing slump burst a global credit bubble.
Despite optimism in polls over Obama's inauguration, US home prices fell a record 18.2 per cent in November from a year earlier, according to a Standard and Poor's index.
A key US Senate panel expanded Mr Obama's stimulus package to $887 billion on Tuesday, adding almost $70 billion of insulation for middle-class taxpayers when it approved its $522 billion portion. The Senate Appropriations also approved its portion - $365.6 billion in spending.
Japan's Nikkei stock average rose 0.3 per cent when Tokyo Electron and other high techs climbed after the US stimulus package was expanded.
In a familiar pattern, an International Monetary Fund official said the IMF would further cut its 2009 global growth forecast to between one and 1.5 per cent amid deteriorating economic circumstances, down from the 2.2 per cent seen in November.
The gloom wasn't absolute. Wall Street gains on Tuesday on hopes of an unconventional Fed move to boost lending and support the ailing US economy, spilled into Asian stocks and currency trade yesterday. after the Lunar New Year holiday.
The South Korean won rose as far as 1,377.9 per dollar, up about 0.9 per cent from Friday's domestic close, buoyed by a five per cent jump in Seoul shares. Asian stocks rose almost two per cent by 0443 GMT.
South Korean consumer sentiment in January rebounded from a 10-year low hit last month, with the help of unprecedented stimulus measures, the central bank said. However, the consument sentiment index still reflected widespread pessimism and analysts doubted it would recover much further in the near term.
In Germany, corporate sentiment also improved in December for the first US crude rebounded 67 cents a barrel to $42.25 a barrel yesterday, from a nine-per cent fall a day ago, as worries over demand due to global economic crisis eased.
In Japan, Prime Minister Taro Aso vowed to create 1.6 million new jobs, reiterating that Japan would try to be the first country in the world to pull out of recession.
Aso's ruling bloc is under pressure ahead of an election that must be held by October.
"The crisis can also be an opportunity. Change comes with pain, but we cannot fear that," Mr Aso said in a policy speech.
Policymakers warned of the dangers of the global recession, stemming from the financial crisis that has already cost trillions of dollars and millions of jobs, after a 0.3 per cent fall in the consumer price index, the biggest since late 1997.
The Australian data came a day after US President Barack Obama tried to allay deep scepticism among opposition lawmakers over his $825 billion-plus stimulus plan and Britain, Japan and Canada also sought to reinvigorate shrinking economies.
Benchmark US 10-year treasuries rose in Asian trading on hopes that the Federal Reserve would move closer to buying long-dated government bonds to lower borrowing rates, a move seen as vital to stabilising the recession-hit US economy.
In Australia, analysts said another bold easing in monetary policy was almost certain when the Reserve Bank of Australia holds its next monthly meeting on Tuesday.
"The deepest global recession in 70 years will kneecap the Australian economy, slash national income and see the RBA deliver what should be amazingly stimulatory monetary policy," said TD Securities senior strategist Joshua Williamson.
Investors see a cut of at least 75 basis points in the 4.25 per cent cash rate. The central bank has already slashed interest rates by three percentage points since September.
The centre-left Labour government is also widely expected to announce, in a week or two, another stimulus plan after priming the pumps in December with a A$10 billion (€5.03 billion) package.
Treasurer Wayne Swan did not give a direct answer when pushed on the timing of a possible second package, but said the government was determined to stay "ahead of the game".
A conga line of governments around the world has spent hundreds of billions of dollars on bank bailouts and fiscal stimulus ,and central banks have slashed interest rates to record lows since a US housing slump burst a global credit bubble.
Despite optimism in polls over Obama's inauguration, US home prices fell a record 18.2 per cent in November from a year earlier, according to a Standard and Poor's index.
A key US Senate panel expanded Mr Obama's stimulus package to $887 billion on Tuesday, adding almost $70 billion of insulation for middle-class taxpayers when it approved its $522 billion portion. The Senate Appropriations also approved its portion - $365.6 billion in spending.
Japan's Nikkei stock average rose 0.3 per cent when Tokyo Electron and other high techs climbed after the US stimulus package was expanded.
In a familiar pattern, an International Monetary Fund official said the IMF would further cut its 2009 global growth forecast to between one and 1.5 per cent amid deteriorating economic circumstances, down from the 2.2 per cent seen in November.
The gloom wasn't absolute. Wall Street gains on Tuesday on hopes of an unconventional Fed move to boost lending and support the ailing US economy, spilled into Asian stocks and currency trade yesterday. after the Lunar New Year holiday.
The South Korean won rose as far as 1,377.9 per dollar, up about 0.9 per cent from Friday's domestic close, buoyed by a five per cent jump in Seoul shares. Asian stocks rose almost two per cent by 0443 GMT.
South Korean consumer sentiment in January rebounded from a 10-year low hit last month, with the help of unprecedented stimulus measures, the central bank said. However, the consument sentiment index still reflected widespread pessimism and analysts doubted it would recover much further in the near term.
In Germany, corporate sentiment also improved in December for the first US crude rebounded 67 cents a barrel to $42.25 a barrel yesterday, from a nine-per cent fall a day ago, as worries over demand due to global economic crisis eased.
In Japan, Prime Minister Taro Aso vowed to create 1.6 million new jobs, reiterating that Japan would try to be the first country in the world to pull out of recession.
Aso's ruling bloc is under pressure ahead of an election that must be held by October.
"The crisis can also be an opportunity. Change comes with pain, but we cannot fear that," Mr Aso said in a policy speech.