Reserve Bank of Australia (RBA) deputy governor Ric Battellino says fears about Chinese investment are overblown.

He says that while China has figured prominently in the public consciousness regarding foreign investment, it accounts for but a tiny fraction of foreign capital invested in Australia.

“Australian Bureau of Statistics (ABS) data indicate that, at the end of 2008, Australian assets owned by Chinese entities stood at around $8 billion,” he said.

“This is less than half of one per cent of total foreign investment in Australia, and puts China a long way down the list in terms of importance as a source of investment,” Mr Battellino said in a statement.

Mr Battellino told the 3rd Annual Australian Parliamentary Conference in Perth that, from China’s perspective, Australia accounts for an even smaller share of its total offshore investment less than one quarter of one per cent.
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The message from the Reserve Bank of Australia (RBA) is that we should try to be cheerful as we wait for the rest of the world to lead us out of recession.

It turns out the RBA had probably concluded the economy met the usual rule of thumb for recession when its board met earlier this month.

On Tuesday, the central bank released the minutes of its April 7 board meeting.
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Australia’s central bank governor Glenn Stevens has called for perspective on banks passing on interest rate cuts.

Banks have come under fire for failing to pass on the latest 25 basis point interest rate cut by the Reserve Bank of Australia (RBA) by the full amount.

“I won’t bite too much at whether it is frustrating observing the pass-through issue but I think we should keep some perspective,” Mr Stevens said.
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The Reserve Bank of Australia (RBA) cut interest rates earlier this month after it realised the outlook for economic growth was even worse than expected.

In the minutes of the April 7 board meeting, released on Tuesday, the RBA acknowledged the economic slowdown had probably met the conventional benchmark for recession - two consecutive quarters of declining gross domestic product (GDP).

“The latest set of indicators suggested that GDP was likely to have fallen again in the March quarter,” the RBA said in the minutes.
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A fall in a measure of inflation at the wholesale level is likely to comfort the Reserve Bank of Australia (RBA) as it attempts to stimulate the local economy, economists say.

Producer prices at the final stage of production fell by 0.4 per cent in the March quarter, the Australian Bureau of Statistics (ABS) said on Monday.

It was the largest fall in a quarter since June 2003.

In annual terms, the producer price index (PPI) grew four per cent to March 31, the slowest pace since the December quarter of 2007.
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A slowing rate of inflation during the March quarter will comfort the central bank as it contemplates more interest rate cuts to help revive a weakening economy, economists say.

The headline consumer price index (CPI), the key measure of inflation, is forecast at 0.5 per cent in the March quarter for an annual rate of 2.9 per cent, an AAP survey of 11 economists showed.

This compares with a headline rate of 3.7 per cent in the December quarter, which fell 0.3 per cent during the period because of an 18.2 per cent drop in automotive fuel prices.
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photo credit: la_cola_de_mi_perroThe global economy will only recover once the credit supply and the world banking system are restored from their sick beds, a leading official from the central bank says.

Reserve Bank of Australia’s (RBA) head of financial stability department, Luci Ellis, said it was crucial that steps were taken to revive the health of the financial system.

“Restoring the global banking system to health is a precondition for a recovery in credit supply and economic activity,” Dr Ellis said at a conference on the global financial crisis in Melbourne on Wednesday.
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The Reserve Bank of Australia (RBA) cut its benchmark interest rate by a quarter of a percentage point on Tuesday, a move midway between widely held expectations of either a bigger move or no move at all.

The move brought the overnight cash rate to 3.00 per cent, its lowest since March 1960.

Prior to the announcement at the conclusion of the monthly meeting of the RBA’s board, the futures market had ostensibly factored in a cut of that size, but the pricing really reflected a split in financial markets between those expecting no move and those anticipating a cut of half a percentage point.
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The Reserve Bank of Australia (RBA) has cut the cash interest rate, after seeing scope for a “modest” adjustment in monetary policy.

The central bank on Tuesday cut the cash rate by 25 basis points to three per cent, its lowest level in 49 years.

The RBA said there had already been a major change in both monetary and fiscal policy, following a series of rate cuts since September and the announcement of federal government fiscal stimulus initiatives.
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Here’s the full text of the statement by Glenn Stevens regarding the decision to hold rates on the 7th April.

At its meeting today, the Board decided to lower the cash rate by 25 basis points to 3.0 per cent, effective 8 April 2009.
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Home buyers have all but given up on fixed-rate home loans in anticipation of the Reserve Bank of Australia (RBA) cutting interest rates further, banker and insurer Suncorp says.

The RBA holds its monthly board meeting on Tuesday and economists are split on whether the central bank will hold the cash rate steady for another month or reduce it by a further 25 to 50 basis points.

Even if it doesn’t cut the rate this month, financial markets are betting on further reductions this year towards two per cent.
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The economic downturn has evolved to the point where it is now possible to voice some optimism over the outlook for Australia without sounding dangerously naive.

Reserve Bank of Australia (RBA) deputy governor Ric Battellino on Tuesday looked on the bright side and actually sounded quite realistic.

He did not try to gloss over the effect of the global financial crisis and the ensuing Great Recession on the domestic economy, while addressing an urban development convention in Brisbane.
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The Reserve Bank of Australia (RBA) says there is scope to cut interest rates further if needed, with domestic economic growth expected to fall in 2009.

RBA deputy governor Ric Battellino also said Australia was better placed to ride a revival in the global economy, and that were some positive signs in recent economic data in the US.

“The monetary policy transmission process has been effective and there remains scope to ease policy further if circumstances require,” Mr Battellino told the Urban Development Institute of Australia National Congress 2009 in Brisbane on Tuesday.
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Sales of new homes rose for a second straight month in February as lower interest rates and government grants enticed buyers, a survey shows.

The Housing Industry Association (HIA) said new home sales rose by 3.9 per cent in February, led by a 4.7 per cent increase in the purchases of detached homes.

HIA chief economist Harley Dale said the project home building market received a boost from low interest rates and the first home owners grant (FHOG).
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A boom in lending for housing, led by low interest rates, is not expected to cause a sharp rise in bad debts when rates eventually pick up again, the Reserve Bank of Australia (RBA) says.

A sharp rise in arrears is not expected as household budgets are under less stress than those in other countries and the rise in Australian incomes since 2003 has outpaced the growth in consumption spending.

The RBA also says the ability of households to service their loans has improved, with the four per cent annual appreciation in house prices over the past five years dwarfed by the eight per cent annual growth in household disposable income over the same period.
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