Australian inflation falls

Inflation in Australia is slowing far quicker than estimated, although on a negative note, manufacturing hit a new low in the month of November, due to the fact that new orders have plummeted, according to figures released by the Australian Industry Group.

The fall in industrial output, as well as the decline in the construction industry has resulted in many calls for interest rates to be cut further.

In response, the Reserve Bank of Australia today reduced interest rates by 100 basis points to 4.25%.

In September, the Central Bank cut interest rates by 2 percentage points in order to stave off recession, although with the continued cuts across Asia, it seems as though the drastic measure taken a few months ago is simply not enough, given the severity of the global economic downturn.

The Labour government of Australia has announced a spending stimulus worth AUS$15 billion over five years on hospitals and schools, which is in addition to a previous stimulus package that was announced recently.

Business sales have fallen so far in the quarter and even though gross operating profits increased by 5.2 percent in mining, it is probably not going to be repeated as the window of cheaper commodity prices has gone, so the future is likely to be even harsher without more rate cuts.

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