In cutting interest rates to a fresh record low of 2.0% Tuesday, Australia’s central bank is hoping to give a jolt to an economy that’s suffering from the end of a decadelong mining boom.
But a series of rate cuts in the past three years have failed to achieve the Reserve Bank of Australia’s goal of fostering manufacturing and other businesses that lost out during the era of high commodity prices. Weighed down by high costs, weak consumer demand and other worries—many of which are hangovers of the boom—businesses are reluctant to invest. That’s left many here wondering what will drive Australia’s economy now.
The head of the RBA, Glenn Stevens, last year called on firms to unlock their “animal spirits.” His plea appears to have gone unheeded. Business confidence in February hit its lowest point since Prime Minister Tony Abbott was elected in September 2013, improving only modestly in March, according to figures from National Australia Bank.