Australia cuts rate to record low 0.5% to fight virus impact

CANBERRA, Australia -- Australia’s central bank on Tuesday cut its benchmark interest rate by a quarter of a percentage point to a record low of 0.5% in response to the economic shock of the new coronavirus. The reduction at the Reserve Bank of Australia’s monthly meeting is the first since October and the fourth since June. It was announced hours before financial leaders and central bank governors of other major industrial nations planned to hold a teleconference to discuss ways to confront the crisis. Reserve Bank Governor Philip Lowe said his board took the decision to “to support the economy as it responds to the global coronavirus outbreak.” “The coronavirus has clouded the near-term outlook for the global economy and means that global growth in the first half of 2020 will be lower than earlier expected,” Lowe said in a statement. Before the COVID-19 outbreak, the slowdown in the global economy that started in 2018 appeared to be coming to an end, he said. “It is too early to tell how persistent the effects of the coronavirus will be and at what point the global economy will return to an improving path,” Lowe said. The Organization for Economic Cooperation and Development on Monday forecast that economies “strongly interconnected with China” such as Australia would suffer most the virus-linked global downturn . The OECD forecast that the COVID-19 outbreak will reduce Australian economic growth by half a percentage point to 1.8% this year. Lowe said last year he wants to use rate cuts to get the economy growing fast enough to push the unemployment rate down to 4.5%. The jobless rate currently sits at 5.3%. Australia's central bank is the first after the People's Bank of China to ease monetary policy to counter the fallout from the viral outbreak and it comes as financial leaders and central bank governors prepare to discuss similar measures later Tuesday, noted Shane Oliver of AMP Capital. Others, “including the Fed are all heading in the same direction," he said in a commentary. Rates already are so low that some Australian's will be paying the lowest mortgage rates since the early 1950s, he said.

Trump’s Paris accord call will be anticlimactic

Fri May 26, 2017 | 2:37 PM EDT Steam billowing from the cooling towers of Vattenfall's Jaenschwalde brown coal power station is reflected in the water of a lake near Cottbus, eastern Germany December 2, 2009. Reuters/Pawel Kopczynski Trump’s Paris accord call will be anticlimactic X By Antony Currie | NEW YORK (Reuters Breakingviews) - Donald Trump’s looming decision about whether to keep the United States in the Paris climate agreement will be, let's say, anticlimactic. It will be a surprise if the global-warming skeptic who has called the phenomenon a hoax breaks a campaign pledge by sticking with the 2015 agreement. If he pulls out, though, the actual impact on the climate and on global efforts to limit warming will be limited. The accord reached in the French capital 18 months ago among nearly 200 countries should have more than enough momentum even without Washington's support. Even America’s domestic role in efforts to limit global warming is only partially up to the federal government. The Trump administration can enact policies that favor coal over renewable energy or try to overturn clean-air and water programs. At the margin, those initiatives may worsen emissions or slow the rollout of clean energy and other green initiatives. However, a lot of responsibility is devolved to states and cities, many of which have signed up to their own climate goals. The Under2 Coalition, for example, now has 170 members comprising more than a third of the global economy. It was created by the U.S. state of California and Germany's Baden-Württemberg to align sub-national governments with the Paris targets. Companies play an important role, too. The likes of General Motors, Wal-Mart and Apple have committed to use only renewable energy in the future, for instance. Sometimes they take such decisions of their own accord; other times, investors put pressure on them. Fidelity, for example, will now allow portfolio managers to vote for shareholder resolutions on climate-related issues even when company bosses don't support them, Reuters exclusively reported, joining other major U.S. asset managers like State Street and BlackRock. Meanwhile, some 280 investors representing more than $17 trillion in assets just sent a letter to the G7 countries, meeting this weekend in Sicily, urging them to stick by the Paris agreement. That all means a withdrawal by Trump would be largely symbolic. It would come at a cost, though. With public opinion in much of the world going the other way, it would do further damage to America's overseas reputation and its ability to project soft power. It could even hurt the U.S. economy. The renewable-energy sector employs far more Americans than coal, for example. And increasing infrastructure spending to combat climate change could boost G20 economic output by 5 percent, reckons the OECD. Missing out on that would be an odd call from a businessman-president.