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- Reserve Bank of Australia Keeps Interest Rates Steady at 4.35%
Reserve Bank of Australia Keeps Interest Rates Steady at 4.35%
Mencari News Team
September 25, 2024
Good morning! We're back with a brand new edition after a short hiatus due to unforeseen circumstances. We're excited to be back in action and we'd love your continued support to keep bringing you the latest news.
Today's reading time is 7 minutes. - Miko Santos
WEATHER
Image : BOM
MARKETS
Data is provided by Market Index AU. Stock data as of market close.
Markets: The Australian stock market closed slightly lower overall, but mining and energy stocks surged due to new Chinese economic stimulus measures, while the Reserve Bank of Australia kept interest rates unchanged.
THIS MORNING HEADLINES:
Global Initiative Launched to Safeguard Aid Workers in Conflict Zones. After record casualties, nine countries formed a Ministerial Group to create a Declaration to protect humanitarian workers in conflict zones.
Nationwide Initiative Aims to Break Cycle of Domestic Violence in Australia. A $23 million Australian government trial programme will provide counselling, mentoring, and case management to young men and boys at risk of domestic violence to break the cycle.
PRESENTED BY BADA EMBANKMENT
POLITICS
Government Takes Action Against Supermarket Price Gouging
Image: Anthony Albanese FB page
In a bold bid to safeguard consumers, the Australian government is cracking down on major supermarkets accused of misleading pricing practices.
The Key Points:
The ACCC filed a lawsuit against Woolworths and Coles for alleged pricing misconduct.
The court will prosecute nearly 500 incidents.
The government is introducing a mandatory code of conduct for supermarkets.
Possible penalties: hefty fines, financial sanctions, and regulatory actions if the court case succeeds.
The Australian government has cracked the whip on two of its biggest supermarkets, Woolworths and Coles, for misleading consumers on prices. The government has filed a lawsuit with the Australian Competition and Consumer Commission to replace an existing voluntary code of conduct with a mandatory one.
"Australians are rightly outraged at what has been going on in these major supermarkets.. When shoppers go to their checkout, they expect in the supermarket, where they see the sign of 'specials' for it to actually be cheaper.It is not good enough. Get your act together and behave as you would expect anyone to behave." says Prime Minister Anthony Albanese: "
Why it matters : It holds significance for Australian consumers who may be deceived by supermarket pricing strategies. Rather, it signifies the government's response through the implementation of fair pricing and consumer protection, particularly in light of the challenges they face in times of economic pressure and rising living costs.
Big Picture: It is part of a wider trend, evident in recent investigations across a range of industries, to increase scrutiny of corporate practices and dominance in markets. The tension between free market and consumer protection considerations is alive and well, particularly in key sectors such as food retail.
TOUR DE INTERNATIONAL
🇺🇸 U.S. Deploys Additional Troops to Middle East Amid Rising Tensions. The United States is deploying more troops to the Middle East and positioning naval assets after the flare-up in tensions between Israel and Lebanon's Hezbollah, seeking to deter a wider regional conflict.
🇺🇳 Guterres Calls for Action on Impunity, Inequality, and Uncertainty at UN General Assembly. UN Secretary-General Antonio Guterres warns world leaders at the annual UN General Assembly that increasing impunity, inequality, and uncertainty are driving the world towards a dangerous "powder keg" situation, urging immediate action to address global challenges.
🌎 US President Urges World Leaders to Face 'Inflection Point' in History at UN General Assembly. In his final address to the UN General Assembly, President Joe Biden emphasized the need for diplomatic solutions to global conflicts and urged world leaders to confront an "inflection point" in history, while expressing hope for the future despite numerous challenges.
ECONOMY
Australian Government Clashes with Opposition Over RBA Reforms and Economic Policies
This has been a closely watched decision, with the RBA deciding to leave the cash rate target at 4.35%, pointing to a cautious approach toward monetary policy in light of sustained inflationary pressures. This current decision reflects the dilemma this central bank finds itself in between taming inflation and being cautious regarding economic growth, as it tries to tackle increased prices while propping up economic activities. The decision underlined the continued challenges facing policymakers to confront inflation well above target and their frustrating search for measures that actually work to combat price increases.
The Highlights:
GDP data points to weak economic growth, while resilient consumer demand
Labour market conditions remain tight, unemployment at 4.2%
The RBA forecast inflation to fall back within the target range by the latter part of 2025, reflecting its view on how consumers and input markets will likely behave.
Why it matters: This decision directly affects the financial well-being of Australians as a whole, and also extends into the performance of the overall economy: it will affect things like borrowing costs, consumer spending, and investment opportunities. In contrast, the RBA is trying to reverse inflation with a restrictive monetary policy-to usher in economic stability and sustainable long-term growth by control of the pace of price increases.
This also means continuous struggles for borrowers and probable obstacles to economic growth. The determination of the central bank to fight inflation, even if at some cost in terms of reduced growth, underlines the importance that is placed on this threat from inflation, and the longer-term damage that could result from insufficient restraint.
The decision by the Reserve Bank to keep interest rates on hold was expected. There hasn’t been a rate hike for almost a year. This reflects the good progress we’ve made on inflation. We expect that tomorrow’s CPI data will further show that our policies are helping.
Big Picture: The decision heralds a continuation of a 'no change' monetary environment that is tight. The stance should keep the upward spiral in borrowing costs going for a while longer, especially with likely effects on real estate markets and business investments.
Investors should also be warier of interest rate-sensitive sectors, such as real estate and high-growth stocks.
On the other hand, it does point to capital growth in sectors that benefit directly from inflation-such as certain commodities and inflation-indexed securities. The fact that the RBA is focusing on getting inflation under control, rather than pursuing short-term economic growth, suggests that the period of adjustment in the economy will last much longer, and businesses and investors should also be adaptable.
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CONSUMERS
Australian Government's Economic Strategy Amid Global Challenges
Confronted with increasing international economic pressures, the Australian government adopts a multi-pronged strategy, reducing government expenditure and increasing revenue, while simultaneously undertaking targeted social welfare programs to put a check on inflation and reduce national debt, thereby alleviating in some ways the cost of living for the general populace.
The Key Points:
Inflation reduced by half to 3.5% under existing government policy.
National debt down 10% as a share of GDP over the past five fiscal years.
This also includes relief measures for cost of living: relief in energy bills, subsidies on major goods, and cheaper health care-finance, such as cheaper childcare.
Government Keeps Independence of Reserve Bank Despite Calls for Intervention
The Albanese Government is trying to alleviate the economic challenges with such measures as reductions in public spending, taxation of goods of the upper class, and reforms to social security because inflation and national debt should be reduced while offering a relief package to the cost of living to the citizens. This includes independence of the Reserve Bank, surpluses attainment into the budget through revenue increases, and offering programs of financial assistance like unemployment benefits, housing subsidies, and education grants to households.
Why it matters: These economic policies raised the financial health of Australian citizens; they lower household expenses on average by about 15%, and contribute to a possible 2% annual increase in GDP by offering avenues to make a country's economy healthier. What has remained cardinal in the government's policies on inflation control and cost-of-living adjustment has been a proper balance that engenders economic stability and growth, characterized by stable prices of essential goods and services, increasing consumer purchasing power, and attracting investment in key sectors.
Big Picture: Indeed, mirroring the general state of post-pandemic economic management in most parts of the world, Australia's economic strategy has been to institute various programs-including job creation, infrastructure investments, and trade agreements-to manage inflationary pressures and geopolitical uncertainty. The government's fiscal responsibility in concert with targeted measures of relief perhaps can serve as a model for any other nation grappling with similar economic challenges in regard to progressive taxation systems, investment in renewable energy projects, and improvement of various social welfare programmes for the sustainable growth of the economy.
TECH
FTX Fraud: Caroline Ellison Gets 2 Years for Cooperation in Crypto Scandal
In an extraordinary turn of events, Caroline Ellison, the former CEO of Alameda Research and a central figure in one of the largest financial frauds ever perpetrated on U.S. soil, received a two-year imprisonment sentence.
Despite facing the possibility of decades in prison, Ellison's cooperation with prosecutors and damning testimony against FTX founder Sam Bankman-Fried earned her an unusually lenient sentence that underlined the complex web of deceit and manipulation at the heart of the cryptocurrency exchange's downfall.
The Key Points:
Caroline Ellison received a two-year sentence related to the fraud case at FTX.
Judge praised Ellison's cooperation: She was, he said, "vulnerable" and "exploited."
Ellison pleaded guilty to seven felony counts; she was ordered to forfeit $11 billion.
Prosecutors credited Ellison with critical cooperation leading to the conviction of Sam Bankman-Fried.
Why it matters: The case holds importance because it disentangles the web of deceit and manipulation that lay at the root of how the fall of the cryptocurrency exchange took place and reflects the dark side of the fledgeling cryptocurrency business.
The lenient sentence given to Ellison showed how cooperation in such cases of complex financial crime is important and may encourage persons to come forward with deals in similar situations. It also serves to put into sharp focus the personal and professional consequences that flow from fraudulent enterprises, even in a supporting role, and invites consideration of accountability and equity in dealing with high-profile white-collar offences.
Big Picture: The FTX scandal and Ellison's sentencing send ripples through the cryptocurrency market into financial regulation. This case has shaken confidence in digital assets and could lead to increased regulatory scrutiny, along with tighter controls in crypto.
It also serves as a warning to investors and underlines demands for better transparency and accountability in emerging new financial technologies. And in the process, the huge disparity in sentence length between Ellison and Bankman-Fried could shape how prosecutors approach future financial crimes and cooperating witnesses within the judicial system.
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