Australia's interest rates: second helpings

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Australia's interest rates: second helpings. In a perfect world, the Reserve Bank of Australia would hold its fire today and desist from cutting interest rates. Having cut them in February for the first time in 18 months, the central bank would surely like to wait to see how the economy responds. Moreover, frothy property markets in Sydney and Melbourne argue against further easing. But the past few days may have changed the RBA's calculations. Corporate investment has been weakening; spending by mining companies has declined, and other industries have not made up the shortfall. And a rate cut by China's central bank at the weekend underscored that country's slowdown and made a recovery for Australia's beleaguered commodities sector look even more remote. Australian rates are at a record low of 2.25%, but unlike other central banks with rates already at rock bottom, the RBA at least has the luxury of being able to cut them further.


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