* RBA cuts cash rate 25 bps to 3.0 pct, matching record lows
* Says data confirm peak of resource investment approaching
* Market wagering on at least one more cut, some say 2 pct
* Data shows fiscal tightening bites in Q3, GDP report due
By Wayne Cole
SYDNEY, Dec 4 Australia's central bank cut
interest rates a quarter point to a record-matching low on
Tuesday, stepping up efforts to safeguard the rich world's most
resilient economy from the risk of recession as a mining boom
The Reserve Bank of Australia (RBA) cut its main cash rate
to 3.0 percent following its monthly policy meeting, bringing
the easing since May to 125 basis points and matching the trough
hit during the darkest days of the global financial crisis.
"While the full effects of earlier measures are yet to be
observed, the Board judged at today's meeting that a further
easing in the stance of monetary policy was appropriate now,"
said the central bank's governor, Glenn Stevens.
"Looking ahead, recent data confirm that the peak in
resource investment is approaching. As it does, there will be
more scope for some other areas of demand to strengthen."
Financial markets were almost fully priced for an easing
given signs the seven-year old bonanza in mining investment is
finally likely to crest next year, leaving a hole in growth that
needs to be plugged by other sectors of the economy.
The move was so well discounted the local dollar actually
firmed a quarter of a cent to $1.0445 on the news.
Yet, investors are still wagering official rates will have
to go lower yet to truly stimulate demand among cautious
consumers and a lacklustre housing market.
Interbank futures suggest rates could approach 2.5
percent by the middle of next year, while some economists think
a floor of 2 percent is not impossible.
"There will more to come next year. Although the RBA has cut
rates a fair bit, we think they'll probably have to do a bit
more to help boost activity in the economy," said Spiros
Papadopoulos, a senior economist at National Australia Bank in
Even after Tuesday's cut, Australian rates are still among
the highest in the developed world.
With rates near zero in the United States, Japan and
Britain, those countries have taken ever more exotic stimulus
steps including buying massive amounts of government debt.
A key concern for the RBA has been a pullback in Australia's
terms of trade, or the ratio of export to import prices. That
has hit company profits, along with tax receipts, and led miners
to pare back on their more ambitious investment plans.
As a result, the boom in mining investment is now likely to
peak earlier than expected, around the middle of next year, and
at a lower level.
The local dollar has also stayed high even as export prices
slid, threatening currency-sensitive sectors such as
manufacturing and tourism.
Recognising the risks, the RBA is trying to stimulate other
sectors of the economy, and particularly home building, to fill
any hole left when mining finally comes off the boil.