Latest news with #MonetaryPolicyBoard
Yahoo
11 hours ago
- Business
- Yahoo
Surprising Aussie benefit of Trump trade
Aussies households are tipped to slow their spending on the back of US President Donald Trump's tariff policy even though they will likely benefit from cheaper goods and it helped deliver a rate cut in May. In a speech made at the Economic Society of Australia Business Lunch, RBA assistant governor Sarah Hunter said Australia was one of the countries that could benefit from cheaper goods in the short term as weakening growth outweighs rising costs for businesses. 'Overall weaker global growth would put near-term downward pressure on the prices of globally traded goods,' she said. 'For countries that are not imposing higher tariffs, such as Australia, this could flow into import prices, making products cheaper and lowering inflation.' But the Trump tariffs are unlikely to lift anaemic household spending, with Australians tipped to moderate their purchases, while business investment is tipped to stall. 'Greater uncertainty about the future can lead households and businesses to save instead of spending and investing, and this is likely to be the case for Australian households and businesses too,' Ms Hunter said. 'Though the magnitude of these effects is itself very uncertain, this does suggest that global uncertainty may weigh substantially on domestic activity if uncertainty remains elevated.' Ms Hunter said there were various forecasts the RBA had made surrounding the global environment, with the base case showing slower economic growth in Australia, a slightly weaker labour market and the price of tradeable goods to dampen. 'Together, these two outcomes mean that inflation is forecast to be a little lower than the February statement of monetary policy, settling around the midpoint of 2 to 3 per cent target range,' she said. Ms Hunter said the overall economic uncertainty on the back of the Trump policies also added to the 25 basis point rate cut in May. 'These were provided to the Monetary Policy Board to help inform their decision-making; taking all the information into account and considering the risks to the outlook, they decided to cut the cash rate by 25 basis points,' she said. Going forward, Ms Hunter said the central bank would continue to watch the data. Mr Trump announced on April 2 a global tariff policy on just about every trading partner on the basis of evening up the US trade deficit. At a minimum, every country, including Australia, faced a 10 per cent tariff, while 'cheating' countries faced higher tariffs Mr Trump eventually paused the majority of his tariff policy for 90 days due to the damage that was being done to his own economy and money markets. He also faced a challenge in the federal courts over his use of power. Sector-specific tariffs such as the 50 per cent on steel and aluminium imports to the US and a 30 per cent 'reciprocal tariff' on China are still in effect.
West Australian
12 hours ago
- Business
- West Australian
‘Downward pressure on prices': Silver lining in Trump trade
Aussies households are tipped to slow their spending on the back of US President Donald Trump's tariff policy even though they will likely benefit from cheaper goods and it helped deliver a rate cut in May. In a speech made at the Economic Society of Australia Business Lunch, RBA assistant governor Sarah Hunter said Australia was one of the countries that could benefit from cheaper goods in the short term as weakening growth outweighs rising costs for businesses. 'Overall weaker global growth would put near-term downward pressure on the prices of globally traded goods,' she said. 'For countries that are not imposing higher tariffs, such as Australia, this could flow into import prices, making products cheaper and lowering inflation.' But the Trump tariffs are unlikely to lift anaemic household spending, with Australians tipped to moderate their purchases, while business investment is tipped to stall. 'Greater uncertainty about the future can lead households and businesses to save instead of spending and investing, and this is likely to be the case for Australian households and businesses too,' Ms Hunter said. 'Though the magnitude of these effects is itself very uncertain, this does suggest that global uncertainty may weigh substantially on domestic activity if uncertainty remains elevated.' Ms Hunter said there were various forecasts the RBA had made surrounding the global environment, with the base case showing slower economic growth in Australia, a slightly weaker labour market and the price of tradeable goods to dampen. 'Together, these two outcomes mean that inflation is forecast to be a little lower than the February statement of monetary policy, settling around the midpoint of 2 to 3 per cent target range,' she said. Ms Hunter said the overall economic uncertainty on the back of the Trump policies also added to the 25 basis point rate cut in May. 'These were provided to the Monetary Policy Board to help inform their decision-making; taking all the information into account and considering the risks to the outlook, they decided to cut the cash rate by 25 basis points,' she said. Going forward, Ms Hunter said the central bank would continue to watch the data. Mr Trump announced on April 2 a global tariff policy on just about every trading partner on the basis of evening up the US trade deficit. At a minimum, every country, including Australia, faced a 10 per cent tariff, while 'cheating' countries faced higher tariffs Mr Trump eventually paused the majority of his tariff policy for 90 days due to the damage that was being done to his own economy and money markets. He also faced a challenge in the federal courts over his use of power. Sector-specific tariffs such as the 50 per cent on steel and aluminium imports to the US and a 30 per cent 'reciprocal tariff' on China are still in effect.
Korea Herald
5 days ago
- Business
- Korea Herald
BOK slashes growth forecast by half to 0.8%
Korea faces slowest growth since 2009 as central bank cuts rates to spur recovery South Korea's central bank nearly halved its economic growth projection for this year to 0.8 percent on Thursday, reflecting deepening challenges both at home and abroad. In a bid to support the struggling economy, the Bank of Korea also delivered a quarter-point base rate cut. The revised estimate for gross domestic product growth, a key measure of economic performance, is down 0.7 percentage point from the BOK's previous forecast of 1.5 percent made in February. The downgrade factors in the 0.2 percent economic contraction in the first quarter and heightened trade risks, including US tariff actions. If realized, this would mark the first time since 2009 that the nation's growth rate falls below 2 percent, excluding the pandemic-triggered contraction in 2020. The last instance was when the GDP rose by 0.8 percent in 2009, hit by the global financial crisis. 'The economy is facing challenges, but it's difficult to compare the current situation to that of 2008,' BOK Governor Rhee Chang-yong said at a press conference following the Monetary Policy Board meeting. 'At that time, Korea's potential growth rate was around 3 percent. Now, it has fallen to 2 percent. A 0.8 percent growth is certainly painful, but it's not a crisis on the scale of 2008.' The BOK's revised projection aligns with recent adjustments from other institutions. The Korea Development Institute, for instance, also halved its growth outlook from 1.6 percent to 0.8 percent. Despite the downgrade for 2025, the BOK trimmed next year's growth forecast by just 0.2 percentage point to 1.6 percent, suggesting an anticipated recovery. 'Over the past two years, construction investment has been the biggest drag on growth,' said Rhee. 'The sector had overheated during the real estate boom and is now undergoing a sharp correction, which we expect to stabilize within this year.' The BOK maintained its inflation outlook for 2025 at 1.9 percent, signaling that consumer prices are expected to follow a stable trajectory despite slower growth. To stimulate economic activity, the central bank lowered the base rate by 0.25 percentage point to 2.5 percent. This marks the fourth rate cut since the BOK began easing in October 2024. All six voting members of the Monetary Policy Board supported the rate cut, excluding Governor Rhee, whose vote is not disclosed. Four of the six members were open to further easing within the next three months, while the remaining two expressed opposition. With the latest decision, the interest rate gap between South Korea and the US has widened to 2 percentage points. However, the recent appreciation of the Korean won has helped mitigate concerns over capital outflows and foreign exchange volatility. 'The won's earlier depreciation was excessive compared to the underlying fundamentals of the Korean economy. Its current appreciation is a normalization process,' said Rhee. Attention now turns to the US Federal Reserve's upcoming Federal Open Market Committee meeting scheduled for June 17-18. The next BOK rate-setting meeting will be held on July 10.
Time of India
6 days ago
- Business
- Time of India
South Korea central bank cuts interest rates amid growing pressure from Trump's tariff war
Rhee Chang-yong (Photo credit: AP) South Korea's central bank lowered interest rates on Thursday to support its export-driven economy amid growing pressure from US President Donald Trump's tariff war. The bank also sharply cut its annual growth forecast, citing rising global uncertainties. The Bank of Korea decreased its key interest rate "from the current 2.75 per cent to 2.5 percent" and revised its economic growth forecast to 0.8 percent for the year, down from its February projection of 1.5 percent. The fourth-largest Asian economy showed lower-than-anticipated growth in the first quarter as the nation, known for its exports and semiconductor industry, struggled with domestic political instability and increased trade conflicts. The interest rate reduction, previously indicated in April by bank governor Rhee Chang-yong, brings lending rates to their lowest point since October 2022. "All six members of the Monetary Policy Board, excluding the governor, expressed the view that the door should be left open to a possible rate cut within the next three months," Rhee stated last month. "Given what we've seen so far from the Trump administration's tariff policy, including reciprocal tariffs, China-specific tariffs, itemised duties, and a baseline 10 percent rate, the growth outlook scenario released in February now appears overly optimistic," he added. The nation's export-oriented economy has suffered significantly from Trump's 25 percent tariffs on automobiles implemented in early April. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Business Times
6 days ago
- Business
- Business Times
South Korea central bank cuts rate, slashes 2025 growth forecast
[SEOUL] South Korea's central bank cut interest rates on Thursday in a bid to cushion the export-dependent economy from US President Donald Trump's tariff war, as it almost halved its annual growth forecast. The Bank of Korea lowered its benchmark interest rate 'from the current 2.75 per cent to 2.5 per cent' and said it predicted the economy to expand 0.8 per cent this year, down from the 1.5 per cent projected in February. Asia's fourth-largest economy grew less than expected in the first three months of the year as the export giant and semiconductor powerhouse reeled from political chaos at home and heightened trade tensions. The rate cut, which was flagged in April by bank governor Rhee Chang Yong, takes borrowing costs to their lowest level since October 2022. 'All six members of the Monetary Policy Board, excluding the governor, expressed the view that the door should be left open to a possible rate cut within the next three months,' Rhee said last month. 'Given what we've seen so far from the Trump administration's tariff policy, including reciprocal tariffs, China-specific tariffs, itemised duties, and a baseline 10 per cent rate, the growth outlook scenario released in February now appears overly optimistic,' he added. The export-driven country has also been hit hard by the 25 per cent tariffs on automobiles imposed by Trump in early April. AFP
