RBA’s Stevens Backflips on ‘period of rate stability’

Stevens cut rates by a quarter point to a new record low of 2.25% today as his economy is on track to record below-potential growth for the sixth year of the past seven — expanding less than the 3.3% average of the past 30 years, when Australia began freeing up markets and lowering trade barriers. Unemployment has also remained above 6% for the longest stretch since 2003, when the nation’s China-fueled mining boom began.

Demand from China, along with fiscal stimulus and interest-rate cuts, helped keep Australia expanding throughout the global financial crisis that tipped the world into its worst postwar recession. That’s changed.

“China isn’t there this time to bail Australia out of weakness, unlike 2009,” said Katrina Ell, an economist at Moody’s Analytics in Sydney. “The RBA has had to step up to the plate and do the heavy lifting this time.”


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