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Case for rate cut strengthens as companies tighten belts

Staff Reporter 1 minute read

The Rudd government yesterday warned that Australia is not immune from the global economic slowdown after new data from the ABS showed a marked fall in company inventories and profits.

The 1.9 and 6.5 per cent fall in inventories and profits in the December quarter have raised expectations of a further rate reduction when the RBA meets this afternoon

Futures markets are split on whether the RBA will move rates down by 25 or 50 basis points.

The news overshadowed the TD Securities/Melbourne Institute inflation gauge released yesterday, which reported an increase in inflation and quelled expectations of any sizeable rate reduction.

Treasurer Wayne Swan said the global economic contraction was taking its toll on Australia.

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“We’ve now got a situation where something like seven out of our top ten trading partners are in recession. This will have a dramatic impact on growth in Australia in the December quarter.”

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Case for rate cut strengthens as companies tighten belts
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