Australia’s central bank keeps interest rates unchanged at 2.5% for 16 months

Australia’s central bank keeps interest rates unchanged at 2.5% for 16 months

On the routine monetary policy meeting held on Dec. 2nd， the Reserve Bank of Australia （RBA） announced to keep its interest rates unchanged at a record low of 2.5%， which is in line with market expectations.

The RBA also hinted that it would maintain its monetary policy and a lower exchange rate would be needed to support the economic growth.

The RBA is widely expected to lower the interest rates by the second or third quarter of 2015.

Since August 2013 when the RBA lowered the rates， the country’s interest rates have been kept on hold for 16 months in a row， a long-term stable situation last seen during the period between December 1994 and July 1996.

Most data indicate that the country’s economy is on a moderate growth path， according to a statement made by RBA governor Glenn Stevens after the meeting.

Australian resource sectors experience an investment slump， while some other sectors see demand growing at different rates. Besides， the public spending is also on the downward trajectory as planned. Generally speaking， the RBA remains its expectation of below-trend economic growth for the next few quarters.

Stevens pointed out that the existing monetary policy helps maintain demand growth and keep the inflation rate under control.

“On present indications， the most prudent course is likely to be a period of stability in interest rates，” said the governor.

Though the exchange rate recently traded at lower levels， partly due to the strengthening US dollar， the Australian dollar is still higher than most estimates of its fundamental value， particularly given the sharp declines in key commodity prices in recent months， according to Stevens.

The governor stressed that a lower exchange rate is likely to be needed to achieve balanced economic growth.

Australia’s biggest builder sells its unit to China’s SOE for A$1.15 billion

On Dec.12th， 2014， Leighton Holdings Ltd.， Australia’s biggest builder， confirmed the news that it has entered into a deal with China Communications Construction International （CCCI）， a subsidiary of China’s state-owned China Communications Construction Co.， Ltd.（CCCC）， to sell its John Holland to the latter for a consideration of approximately A$1.15 billion.

The deal will represent the biggestever investment by a Chinese construction firm in the country to date.

CCCC， the world’s fourth-largest construction firm by operating revenue， is listed on the Shanghai Stock Exchange and the Hong Kong Stock Exchange， with a market capitalization of A$23.5 billion.

A new wave of infrastructure construction investment in Australia is in the making， as the country’s federal government prepares to sell its stateowned assets to fund the state infrastructure projects.

The infrastructure projects include freeways in Sydney， Melbourne and Brisbane， upgrades to highways along the country’s east coast， and a new inland railway between Melbourne and Brisbane.

The ownership of John Holland， one of Australia’s largest specialist contractors， will provide the state-owned enterprise （SOE） with a springboard into the infrastructure construction in Australia.

The Melbourne-based John Holland， also known as the builder of the Australia’s parliament building， was acquired by Leighton Holdings in 2000.

Spinning off John Holland will reduce its Leighton Holdings’ debt by around 10%. However， the company will lose about A$3.7 billion in annual operating income after the deal.

In June 2014， Leighton Holdings announced that it would also review its services， property units and John Holland and consider taking on partners in a bid to strengthen the balance sheet， simplify the operating model and enhance the project delivery efficiency.

The deal is expected to be completed in the first quarter of 2015.

NAB sells ￡1.2bn UK commercial property loans to Cerberus

On Dec.16th， 2014， the National Australia Bank （NAB）， Australia’s biggest commercial bank by asset， entered into an agreement with Cerberus Capital Management， one of America’s largest private equity firms， to sell its high-risk UK commercial property loans for a consideration of ￡1.2 billion.

From the sale， the bank will make a small profit， obtain a capital of ￡127 million and reduce its 93% of high-risk loans in the commercial property business.

“The sale of high-risk loans marks a significant milestone for the bank’s strategy of reducing low-return legacy assets and consolidating the core market，” said Andrew Thorburn， CEO of the NAB.

The NBA also said the sale would not be filed for regulatory approval with the assets directly written off from the bank’s balance sheet.

Earlier in 2014， the NBA sold a ￡625 million portfolio of high-risk UK com- mercial property loans.

Since 2008， the bank has seen its annual profit decline for four consecutive years due to bad UK debts.

Australia rated as world’s worst performer in developed world on climate change

At the recently-concluded United Nations Climate Change Conference（COP20） held in Lima， the capital of Peru， from Dec. 1st to Dec. 12th， 2014， the annual Climate Change Performance Index （CCPI） was released by Germanwatch， a German governmentfunded think tank， and the Climate Action Network （CAN） Europe， Europe’s largest coalition working to promote government and individual action to limit human-induced climate change to ecologically sustainable levels.

According to the report， Australia was rated as the worst-performing industrial country in the world， while Denmark was rated as the best performer， followed by Sweden and the UK， on the basis of the analysis of their governments’ climate policies.

Australia’s rank was only above Saudi Arabia ， the worst performer among all countries but not classified as an industrial country.

The report pointed out that Australia’s new conservative government has abolished climate policies previously in effect. As a result， the country replaced Canada as the worst-performer among industrial countries as its rank in the policy evaluation fell 21 places compared to a year earlier.

China， the world’s biggest emitter of the greenhouse gasses blamed by some scientists for climate change， was ranked 45th in the report， trailing closely behind the world’s second-largest emitter， the U.S.