05/11/2025

BIZ & FINANCE WEDNESDAY | NOV 5, 2025 17 Australia central bank maintains rates, might be done easing SYDNEY: Australia’s central bank yesterday left its cash rate steady as expected at 3.6%, saying it was cautious about easing further given higher inflation, firmer consumer demand and a revival in the housing market. Wrapping up a two-day policy meeting, the Reserve Bank of Australia (RBA) said recent data suggested inflationary pressures could remain in the economy, adding that it would update its view as data evolves. Markets had seen little chance of a rate cut this week following an uncomfortably hot reading on third-quarter inflation, and now see scant prospect of an easing until May next year. At a press conference, RBA governor Michele Bullock said the central bank does not have a bias on policy and even though the current cash rate is still judged to be a little restrictive, it is fraught with uncertainties. “It’s possible there’s no more rate cuts. It’s possible there’s some more but as I said earlier, we didn’t go as high, we might not have to come down as far,” said Bullock. The spike higher in inflation means the RBA does not see core inflation returning to the target band of 2-3% until the second half of 2026, a reason that policymakers are cautious about further easing. The lack of any surprises left the Australian dollar a touch softer at US$0.6526, while the bonds took a bigger fall, with three-year government bond futures down 5 ticks to 96.29, near a five-month low. Swaps imply just a 10% chance for a move in December, with some betting that the entire easing cycle is over. The RBA has cut interest rates three times this year after assessing quarterly inflation data, but in the third quarter, core inflation surged to 3%, hitting the top of the 2-3% target band, as market services and housing costs stayed elevated. Home prices jumped by the most in more than two years in October, adding to signs that financial conditions might not be as tight as thought. Complicating the picture for policymakers, the jobless rate spiked to a four-year high of 4.5% after a long period of holding largely steady. The consumer spending recovery also appears to be patchy. – Reuters RBI’s defence of rupee saps liquidity MUMBAI: The aggressive dollar sales by the Reserve Bank of India (RBI) to defend the rupee are draining liquidity from the banking system, prompting calls for bond purchases to ease the strain, ten traders and economists told Reuters. The RBI has scope to buy 1 trillion-1.5 trillion rupees (RM47.4 billion-RM71.2 billion) of government bonds, citing a shrinking liquidity surplus even as the central bank signals policy space to support growth, they said. Predictable and surplus liquidity is important to keep rates low in the Indian economy which is facing pressures from US tariffs and slow capital flows. “The potential OMO (open market operation) purchase space has expanded to 1-1.5 trillion rupees up from 500-700 billion rupees,” Samiran Chakraborty, chief India economist at Citi wrote in a note on Monday. “We anticipate an OMO announcement following a ‘price’signal from rising yields/overnight rates or potentially at the December MPC meet to offset a status-quo on rates,” he said. The central bank will meet banks and dealers this week, Reuters reported. India’s banking system liquidity surplus fell to its lowest this fiscal year in October, despite inflows from a cash reserve ratio cut announced in June. Durable liquidity declined from 5.2 trillion rupees on Sept. 19 to 3.6 trillion rupees on Oct 17 and could slip further to around 3.3 trillion rupees by Oct 24, Citi said in a note. – Reuters

Xi seeks closer investment, economic ties with Russia

signed a “no-limits” partnership in February 2022 days before Putin sent tens of thousands of troops into Ukraine. Since then, Russia has turned to China to blunt the impact of sanctions, highlighting record trade, increased settlements in yuan and deepening energy cooperation. Bilateral commerce has, however, de clined in recent months as China faces mounting US pressure over trade and technology. Chinese state oil majors suspended purchases of seaborne Russian oil following US sanctions on Rosneft and Lukoil, Moscow’s two biggest oil companies, Reuters reported last month. In a joint communique published on the Russian government website yesterday, both countries agreed to “strengthen cooperation in all spheres and respond appropriately to external challenges”. Russia also reaffirmed its adherence to the “one-China” principle and opposition to “Taiwan independence”. China regards democratically ruled Taiwan as part of its territory. Taiwan’s government rejects Beijing’s claim and says only the island’s people can decide their future. – Reuters

o Energy, agriculture, aerospace, digital economy and green development highlighted as industries in which they can advance cooperation and foster new engines of growth: Media reports

BEIJING: China’s President Xi Jinping yesterday sought to expand mutual investment with Russia and affirmed Beijing’s commitment to advance ties despite “turbulent” external conditions, Chinese state media reported. Xi met Russian Prime Minister Mikhail Mishustin in Beijing at the Great Hall of the People, a day after Chinese Premier Li Qiang held a meeting with Mishustin in Hangzhou, where Li said China wanted to strengthen cooperation with Russia and defend shared security interests. The Kremlin has highlighted the significance of Mishustin’s visit at a time when Russia is under major Western sanctions over its war in Ukraine and looking to stem a recent slowdown in trade with China. “China-Russia relations have stayed the

course towards higher-level and higher quality development, advancing steadily despite a turbulent external environment,” Xi told Mishustin, according to state broadcaster CCTV. “Safeguarding, consolidating and de veloping China-Russia relations is a strategic choice for both sides,” Xi said. He highlighted industries such as energy, agriculture, aerospace, digital economy and green development where the two countries could advance cooperation and foster new engines of growth. Mishustin said it was important for both sides to continue creating favourable conditions for attracting mutual investment and supporting joint projects, according to Russia’s TASS news agency. Xi and Russian President Vladimir Putin

Takaichi (centre) chats with her Cabinet members before a session to answer questions at the House of Representatives of the National Diet in Tokyo yesterday. – AFPPIC

Japan yet to achieve wage-driven inflation: Takaichi TOKYO: Japanese Prime Minister Sanae Takaichi said yesterday the country has yet to achieve sustainable inflation accompanied by wage gains, signalling her preference for the central bank to go slow in raising interest rates. While consumer inflation continues to hover around 3% due to rising food costs, Japan is still “half way” in achieving sustainable and stable price growth backed by solid wage gains, Takaichi told parliament. “I hope the Bank of Japan (BOJ) conducts appropriate monetary policy towards consumption tax rate – an idea proposed by some opposition parties, saying there were several challenges such as time needed by retailers to adjust their equipment to a new rate. Takaichi’s remarks on monetary policy may affect the BOJ’s decision on whether to resume rate hikes as soon as its next meeting on Dec 18-19, as some market players predict. investment focused on critical sectors such as chips and defence. Takaichi convened the headquarters’ inaugural meeting yesterday, a policy command centre aimed at revitalising the country’s industrial base with targeted government investment. “Under our principle of responsible and proactive fiscal policy, we will carry out strategic fiscal spending,” Takaichi said at the meeting.

BOJ governor Kazuo Ueda is scheduled to deliver a speech and hold a news conference in Nagoya, central Japan, on Dec 1, where he could drop hints on the likelihood of a near term hike. The BOJ ended a massive, decade-long stimulus last year and raised interest rates to 0.5% in January on the view Japan was on the cusp of sustainably achieving its 2% inflation target. It has kept rates steady since then, including at last week’s policy meeting, to ensure Japan makes further progress in durably hitting its price goal backed by solid wage gains. In another development yesterday, Takaichi’s government launched its economic strategy headquarters, aiming to boost the world’s fourth-largest economy with public

“Our goal is to strengthen the supply structure of the Japanese economy, increase income, improve consumer sentiment, boost corporate earnings, and ultimately raise tax revenue without increasing tax rates,” she added. The government has not detailed a funding plan or value for the intiative. A total of 17 industrial sectors were designated for focused investments, including artificial intelligence, semiconductors, ship building, aerospace and defence. At the meeting, the government also approved the creation of an advisory panel which includes private-sector experts. – Reuters

sustainably and stably achieving its 2% inflation target,” said Takaichi, who has advocated expansionary fiscal and monetary policy. She was questioned by Yoshihiko Noda, head of the largest opposition party and a former prime minister, who said preventing the BOJ from raising interest rates could push up import costs and inflation more broadly by weakening the yen. Takaichi also said her administration will “strategically” deploy fiscal spending to increase household incomes, improve con sumer sentiment and strengthen the eco nomy. She voiced caution about lowering Japan’s