Date: Wed, 8 January 2020
Author: Grace Shao
Australia’s tourism and consumer sectors plummets as bushfires blazes across the nation, threatening the country’s economy, reported the chief economist of BetaShares Capital. 24 people in estimation have perished due to wild fires, according to official numbers, and the disaster has killed half a billion animals with thousands evacuating from their homes.
David Bassanese, chief economist at BetaShares Capital warned on Monday that greater than the disastrous loss of lives, people should also prepare for a downturn in the economy. “Certainly, from a broader economic perspective, it’s not helpful,” reported Bassanese. “So possibly, from a macro perspective, it could have a negative impact on consumer confidence, which at the moment is very vulnerable — it’s been the big drag on economic growth.”
Australian Prime Minister Scott Morrison and his conservative government are under immense criticism for failing to tackle the climate issues domestically and internationally. On Monday, the prime minister announced that his government will be issuing funds comprising $2 billion Australian dollars over two years to bushfire recovery, Reuters reported.
More RBA cuts?
“I think (the Reserve Bank of Australia) should do more,” Bassanese mentioned, adding that he envisions additional two more rate cuts by the central bank in the first half of this annual. The economist also reported, “Even before the fires, I thought they would cut another two times given the weakness of the economy.” “A cut in February is still very, very likely and then a cut within the next few months. Beyond that, what they’ve said is that they probably don’t want to go beyond 0.25% which is very close to zero.”
“Then we will have talks of quantitative easing measures, buying government bonds to lower longer-term interest rates, I think will be discussed in the second half of year,” he said. At the end of 2019, RBA was already at record low policy rates, implicating that there won’t be too many more rate cuts to come, reported the economist.
“It can really only cut rates twice more before it hits what it considers ... a lower bound in terms of short-term interest rates,” reported Bassanese.
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