RBA will have to cut rates again: ACCI
Market watch top headlines
CANBERRA, Feb 12 AAP
February 12 2013, 1:14PM
The central bank will have to cut the cash rate again at some stage given the chronic low levels of business and consumer confidence, a leading business group says.
The Australian Chamber of Commerce and Industry (ACCI) also believes the mood of business has not been helped by a series of federal government polices, including new taxes and regulations that have impacted on Australia's competitiveness.
The chamber's chief economist, Greg Evans, released ACCI's business expectations survey for the December quarter on Tuesday, which showed all key activity components remaining at contractionary levels.
"Clearly mainstream business outside the buoyancy of the mining sector continue to struggle," Mr Evans told reporters in Canberra.
"We appear to have settled into a sustained level of difficult trading conditions."
The general business condition index was 41.9 points, down from 42.8 points in the September quarter, remaining below the key 50-point mark that separates contraction from expansion.
Sales, exports, profitability, investment and employment were also at contractionary levels, and notably selling prices have been below the 50-point mark for two years.
"We believe the Reserve Bank will have to act at some point to further ease interest rates given what seems to be a chronic level of investment ... outside the mining sector," Mr Evans said.
He said there was little evidence that the mainstream economy was taking up any slack from a peaking mining boom, and that was why the central bank had downgraded its growth forecast to below trend.