By ROD McGUIRK
CANBERRA, Australia (AP) â¿¿ Australia's central bank cut its key interest rate by a quarter percentage point to a record low 2.75 percent Tuesday in an effort to boost economic growth as a mining boom cools and the strong Australian dollar erodes business profits.
Reserve Bank of Australia governor Glenn Stevens said in a statement following the bank's monthly board meeting that economic growth was below trend in the second half of 2012 and continued to be that way in 2013. Australia's long-term trend growth rate is around 3.25 percent a year.
"Employment has continued to grow but more slowly than the labor force, so that the rate of unemployment has increased a little, though it remains relatively low," he said."The global economy is likely to record growth a little below trend this year, before picking up next year," he said. Australia's jobless rate rose from 5.4 percent in February to 5.6 percent in March â¿¿ the highest rate in more than three years. The central bank last lowered its Official Cash Rate in December, cutting it by a quarter point to 3 percent. The rate last bottomed out at 3 percent for six months in 2009 during the global financial crisis and recession. Moments after the bank's announcement on Tuesday, the Australian dollar slid against the U.S. dollar, dropping to $1.0188 from $1.02337. The currency ended Monday's local trading session at $1.0272. Treasurer Wayne Swan had described the 3 percent rate in 2009 as an "emergency low." But he said Tuesday that Australia's economic circumstances in 2009 could not be compared with now. The Australian dollar in 2009 was worth only 60 U.S. cents and global demand was then plummeting. Inflation is under control so the central bank is "in a position to deploy monetary policy, particularly when faced with the fact that we have a high dollar which in itself is a consequence of the strength of our economy," Swan told reporters.