Australia to Raise Interest Rate to 12-Year High, Survey Shows

Australia's central bank will probably increase interest rates to a 12-year high to cool an economic expansion stoking the fastest inflation in almost two decades. ( Bloomberg )

Governor Glenn Stevens will raise the overnight cash rate target by a quarter point to 7.25 percent, adding to last month's increase, according to all 27 economists surveyed by Bloomberg News. The economy, now in its 17th year of expansion, probably grew 0.8 percent in the fourth quarter from the previous three months, a separate survey showed.

Accelerating inflation, stoked by a shortage of skilled workers and rising fuel prices, is forcing Stevens to raise rates as counterparts in the U.S. and the U.K. signal cuts to cushion their economies from slower growth. Australian company profits probably climbed in the fourth quarter and retail sales rose for an eighth month in January, reports will show this week.

``The downside risks to growth from tightening policy pale in comparison to the upside risks to inflation'' of leaving rates unchanged, said Mark Rodrigues, a senior economist at Australian & New Zealand Banking Group Ltd. in Melbourne. ``Demand continues to run well ahead of productive capacity.''

Tomorrow's rate adjustment would be the first back-to-back monthly increase in more than four years. It would also mark a 12th boost since May 2002, when the rate was 4.25 percent. Policy makers will announce the decision at 2:30 p.m. in Sydney tomorrow.

A quarter-point increase would also widen the gap between the Australian and U.S. benchmark rates to 4.25 percentage points, the largest in almost four years. That will fuel demand for Australia's currency, which surged to a record against the U.S. dollar last week.

Concern that the lowest unemployment in 33 years is driving up wages was a key reason central bank policy makers considered raising the benchmark rate by 50 basis points for the first time in eight years at the February meeting, according minutes published last month.

``Additional tightening could be implemented at the March and/or subsequent meetings as judged necessary,'' the minutes said.

Board members ``were strongly of the view that a significant slowing in demand from the pace observed through 2007 would be required for inflation to return to the target'' of between 2 percent and 3 percent, the minutes said.

Gains in underlying inflation have exceeded the central bank's target for two consecutive quarters.

Core inflation, which excludes the most volatile items in the consumer price index, accelerated to 3.8 percent in the fourth quarter, the fastest pace since 1991.

The central bank forecast last month that inflation will remain above 3 percent until 2010 as Chinese demand for coal and iron ore prompts companies such as miner Rio Tinto Group to expand and hire more workers. The jobless rate fell to 4.1 percent in January.

``The risk of inflation remaining uncomfortably high for some time is considerable,'' the bank said on Feb. 11. ``Labor market conditions are tight and there is some evidence of higher growth in aggregate wages in the most recent period.''

Bottlenecks at ports and railways are adding to inflation pressures, economists say.

Australia's current account deficit probably widened to a record A$17.8 billion ($16.8 billion) in the fourth quarter as transport bottlenecks limited overseas shipments of commodities, according to the median estimate of 23 economists surveyed by Bloomberg. The government releases the current-account report at 11:30 a.m. in Sydney tomorrow.

E probably slowed to 0.8 percent in the fourth quarter from 1 percent in the previous three months, according to the median estimate of 24 economists surveyed. The economy probably expanded 3.8 percent from a year earlier.

``While this would represent a modest slowing from the previous quarter's annual growth of 4.3 percent, this is unlikely to provide much comfort for the Reserve Bank,'' said ANZ Bank's Rodrigues.

Retail sales rose 0.5 percent in January, matching the increase in December, according to the median estimate of 24 economists in a separate survey.

Company profits gained 2 percent in the three months through December from the previous quarter, when they fell for the first time in more than two years, according to the median estimate of 21 analysts.

Business profits will be released at 11:30 a.m. today in Sydney. The retail-sales report is out tomorrow and GDP data on March 5.

Telstra Corp. Ltd. and Qantas Airways Ltd. are among companies benefiting from economic growth. Telstra, the nation's largest telephone company, reported last month that first-half profit beat analysts' estimates. Earnings doubled at Qantas, Australia's biggest airline.

Recent reports suggest higher borrowing costs, as well concern that Australia's largest trading partners will be buffeted by slowing U.S. growth, may be start to curb spending by consumers and business.

An index of Australia's leading growth indicators fell in December for the first time in almost three years, business confidence slumped in January to the lowest since the September 2001 terrorist attacks in the U.S., and consumer sentiment fell in February to a 15-month low.

Subscribe to Trend in Google News! Subscribe
Cavushoglu, Blinken discuss situation in Azerbaijan and Armenia
Cavushoglu, Blinken discuss situation in Azerbaijan and Armenia
Armenia found itself in complete military-political isolation even within CSTO - Russian military expert
Armenia found itself in complete military-political isolation even within CSTO - Russian military expert
Putin discusses results of meeting with President of Azerbaijan Ilham Aliyev and Prime Minister of Armenia Nikol Pashinyan with Security Council
Putin discusses results of meeting with President of Azerbaijan Ilham Aliyev and Prime Minister of Armenia Nikol Pashinyan with Security Council
Loading Bars
Latest
We have been waiting for 30 years for UNESCO to talk on what was done against Azerbaijan’s cultural heritage - president's assistant
Azerbaijan to be praised for efforts exerted in working for greater appreciation of peace building - ICESCO Director General
Azerbaijan hosts Peace4Culture Partners Forum 2021
Turkmenistan, Tajikistan to attract small, medium businesses to joint projects
Azerbaijan discloses oil exports to India over 10M2021
Azerbaijan’s 10M2021 oil exports to Portugal revealed
S.Korea hits new COVID-19 record, halts quarantine exemptions to block Omicron
Azerbaijan reveals oil exports to Germany in 10M2021
Number of passenger planes received by Iran’s Persian Gulf International Airport soars
Iran unveils data on projects to be launched, based on pre-agreed foreign investments
Baku Book Center hosts book presentation of writer Charlie MacKesy, translated into Azerbaijani (PHOTO)
Canadian Condor Petroleum to convert Kazakhstan’s freight locomotive fleet to run on LNG
Uzbekhydroenergo JSC’s program to support decarbonisation in Uzbekistan – Fitch Ratings
Iran records increase in cargo movements at Khorramshahr port
Azerbaijan reveals number of streets in Baku named after martyrs of second Karabakh war (Exclusive)
Preventive maintenance of substation conducted at SOCAR’s Kulevi terminal
President Ilham Aliyev receives president of Turkish Council of Higher Education (PHOTO)
Azerbaijan's Central Bank increases its foreign exchange reserves since early 2021
Heydar Aliyev Foundation completes restoration of Catholic Church of Blessed Virgin Mary in Baku (PHOTO)
First known UAE case of Omicron variant detected in fully vaccinated traveller
Uzbekistan shares domestic COVID-19 data for December 1
Azerbaijani currency rates for December 2
Azerbaijani oil prices increase
Azerbaijan elected member of UNESCO Committee for Protection of Cultural Property in Event of Armed Conflict
Iranian currency rates for Dec. 2
Oil rises as investors focus on OPEC+ decision amid growing Omicron fears
Azerbaijan announces new auctions on state property facilities
US to strengthen travel restrictions
IAEA says Iran begun using advanced centrifuge at Fordow
Iran, Russia to speed up construction of International North-South Corridor
Uzbekistan tightens quarantine measures for people coming from Germany, UK and 9 other countries
Georgian PM invited to Eastern Partnership Summit
Ireland reports first case of Omicron variant
Amazon invests in 274 renewable energy projects globally
World Bank backs using $280 mln in frozen aid funds for Afghanistan
Cavushoglu, Blinken discuss situation in Azerbaijan and Armenia
Alec Baldwin on fatal movie set shooting; ‘I didn't pull the trigger’
Afghanistan's GDP likely to drop 20 pct in one year: UN
UAE reports its first case of COVID-19 variant Omicron
Moderna exec says company could have Omicron booster ready in March
UN says international migration rose last year despite Covid-19 impact
Kyrgyz border service reports shots from Tajikistan
Bennett declares ‘Yamam’ Israel’s national counterterrorism force
Transport infrastructure in Karabakh to turn Azerbaijan into logistics hub between Central Asia and Europe – CAERC
Four injured after old WWII aircraft bomb explodes in Munich - police
1st US case of COVID-19 omicron variant identified - Fauci
OPEC can elect new secretary general in January 2022 — source
President Erdogan talks bilateral relations with Crown Prince of UAE
Georgia to receive special PCR tests to detect new Omicron variant of coronavirus
Qatar Airways to launch flights to Uzbekistan from Jan 17, 2022
Iran military clashes with armed men on Afghan border
Armenia found itself in complete military-political isolation even within CSTO - Russian military expert
Net foreign assets in Azerbaijan grow for 10M2021
New geopolitical situation in region opens way for Azerbaijan’s further development - ambassador
Ambassador of Kazakhstan expresses condolences to Azerbaijan due to helicopter crash
Azerbaijan working on reconstruction railway line which is part of Zangazur corridor (PHOTO)
SOCAR’s STAR refinery tests numerous types of crude oil
Azerbaijan considering sending medical workers of Baku clinics to district hospitals
Azerbaijan shares data on number of vaccinated citizens
Azerbaijan confirms 1,795 more COVID-19 cases, 1,967 recoveries
Azerbaijani National Depository Center opens tender to buy new generation security system
Georgia boosts honey exports
Solar PV growth to surpass wind in EU in 2021-2026
Servicemen injured in Azerbaijani helicopter crash talk about incident (PHOTO/VIDEO)
Turkmen company exports paper products to Uzbekistan, Turkey
Iranian companies express readiness to restore factories in Syria - minister
Azerbaijani, Armenian FMs to meet in Sweden
President Ilham Aliyev receives EU Special Representative for South Caucasus (PHOTO/VIDEO)
US Marshall Legacy Institute sends eight more mine detection dogs to Azerbaijan (PHOTO)
Iran’s Bahar Azadi gold coin price rebounds
Azerbaijani agency shares data for mine detection, clearing work in liberated territories
Central Bank of Azerbaijan opens tender to insure fixed assets
Azerbaijan’s 10M2021 oil exports to Spain revealed
Uzbek Statistics Committee shares data on volume of retail trade turnover
Georgian medics advise reconsidering COVID-19 passports issuance
Overview of Uzbekistan's volume of wholesale trade turnover dynamics between 2010-2020
Price indexes of construction, trade sectors at Uzbek stock exchange fall
Georgia, IMF discuss new co-op program
Prices for goods and services in consumer market of Uzbekistan rise
Turkey’s diesel fuel exports to Georgia down
Georgia, NATO discuss further co-op and Black Sea security
Iran bans import of musical instruments due to lack of foreign exchange resources
Turkmen ministry prolongs tender for supply of metal blanks
IRENEX shares data on sales of Tabriz Oil Refining Company
Activities in Iran’s Imam Khomeini port down
Star Refinery satisfies about quarter of Turkey's refined petroleum product needs - CEO
Kazakhstan’s oil and gas company opens tender to supply fittings
Mobile phones rank first in Iran’s total imports - IRICA
Turkmenistan’s education ministry extends tender for setting drip irrigation system
Oil minister tells president, parliament that Iran's oil exports 'significantly grow'
Azerbaijan, Pakistan talk prospects for development of military co-op (PHOTO)
Azerbaijan's SOCAR Polymer exports increase over 10M2021
Iran unveils volume of dates export
Iran’s CBI reveals data on balance of bank loans
EU to exceed current renewable capacity plans for 2030
Azerbaijan reveals oil exports to Italy in 10M2021
Azerbaijan shares data on oil export to Croatia in 10M2021
Baku Metro provides ‘November 8’ station with backup power supply (Exclusive) (PHOTO)
Renewable electricity generation to exceed average annual growth rate of 2015-2020
Expansion of bioenergy for power capacity to slow down
All news