New Zealand's central bank cuts rates by 0.5 percentage points, ASX closes slightly higher — as it happened (2025)

ASX 200: +0.13% to 8,187 points (close)

Australian dollar: +0.04% at 67.48 US cents

Dow Jones:+0.3% to 42,080-points

S&P 500: +1% to 5,751-points

Nasdaq:+1.5% to 18,182-points

FTSE 100: -1.4% to 8,190-points

EuroStoxx 50: -0.4% to 4,949-points

Brent crude: +0.74% to $US77.75/barrel

Spot gold: -0.02% to $US2,621/ounce

Iron ore: +2.09% at $US107.7/tonne

Bitcoin: +0.06% at $US62,392

Prices current around 4:25pm AEDT.

Live updates on the major ASX indices:

That's it for today. Thanks for joining us.

We'll be back tomorrow morning to update you on the developments in global markets overnight.

Until then, take care.

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Zip Co was the top performing stock, by percentage change in value (+6.25%), followed by Block Inc (+4.35%) and Pro Medicus (+4.01%).

The worst performing table was dominated by energy and resource stocks. Mineral Resources (-6.42%), Liontown Resources (-5.39%) and Sigma Healthcare (-5.25%) took out the top three spots.

Here's how the 11 sectors performed on the ASX today.

Energy stocks performed the worst as a group, shedding 2.42% in value.

If you'd like more details about New Zealand's big rate cut today, my colleague Stephanie Chalmers has written it up.

As she explains, the acceleration of the RBNZ's policy easing efforts has marked a turnaround from its approach as late as May, when it discussed the case for further rate increases.

"We think it will end up cutting rates more aggressively than most are predicting," said Capital Economics economist Abhijit Surya.

The market closed at 4pm and trades have settled.

The ASX200 index has finished the day up 10.5 points (+0.13%), at 8,187.4 points.

The Transport Workers' Union says it has reached an in-principle agreement with Ampol Aviation for a large pay increase following recent strike action.

It says after more than 16 meetings and eight months of bargaining, workers have achieved a 28% pay increase over the next three years, more permanent full-time positions, increased weekend and night shift rates, and a promise from the company to consult with workers when making major changes to operations.

In August, workers took protected industrial action at Sydney Airport in their ongoing fight with head fuel Ampol Aviation.

The in-principle agreement will be put to a vote by the workforce in coming weeks.

TWU NSW State Secretary Richard Olsen has issued this statement:

"This agreement is a testament to the power of collective bargaining. Our members stood firm through months of tough negotiations, and together, we've secured the pay rises and job security that they deserve."

"Industrial action was never our first choice, but when pushed, our members proved that they are willing to fight for fair wages and better conditions. This outcome shows that solidarity delivers real results."

"This agreement is a major step forward, but it highlights the broader need for a Safe and Secure Skies Commission. We need an independent body to ensure that worker safety, fair wages, and secure jobs are a standard across the entire aviation industry, not just in isolated wins like this."

Here's a story from Australian Aviation in August that has more details of the argument:

Westpac's Kelly Eckhold reckons the RBNZ will cut rates by another 0.5 percentage points next month.

Thanks Dominic.

I didn't do anything there. It was a big cut'n'paste job of Chris Kent's speech. And great questions.

Tony Burke, the minister for home affairs and cyber security (and more), has circulated a press release to explain something the Albanese government has done today.

The government has introduced a package of cybersecurity legislation to parliament.

Here's what the press release says:

The protection of our cyber security and critical infrastructure is vital to Australia’s national security and economic stability. Recent cyber incidents have demonstrated that attacks can spread instantaneously – and we must harden our systems and legislation to keep ahead.

In this heightened geopolitical and cyber threat environment, strong laws and protections are necessary to protect every citizen and business across our digital economy.

The Cyber Security Legislative Package provides a clear legislative framework for contemporary, whole-of-economy issues, positioning the Australian Government to identify and respond to new and emerging cyber threats.

Subject to the passage of this legislation, Australia will have its first standalone Cyber Security Act.

The Cyber Security Legislative Package will implement seven initiatives under the 2023-2030 Australian Cyber Security Strategy. These measures will address gaps in current legislation to:

• Mandate minimum cyber security standards for smart devices,
• Introduce mandatory ransomware reporting for certain businesses to report ransom payments,
• Introduce a ‘limited use’ obligation for the National Cyber Security Coordinator and the Australian Signals Directorate (ASD),
• Establish a Cyber Incident Review Board.

The package will also progress and implement reforms under the Security of Critical Infrastructure Act 2018 (SOCI Act). These reforms will:

• Clarify existing obligations in relation to systems holding business-critical data,
• Simplify information sharing across industry and Government,
• Introduce a power for the Government to direct entities to address serious deficiencies within their risk management programs and,
• Move regulation for the security of telecommunications into the SOCI Act.

The SOCI Act reforms will also expand current Government assistance measures to ensure Government can step in as a last resort to manage the consequences of significant incidents.

The changes to government assistance measures will better enable the Government to gather information or direct entities to take or refrain from certain actions, on authorisation from the Minister for Home Affairs, in response to a serious incident.

The measures in this package have been developed following extensive consultation with public and private stakeholders, through public consultation on the Cyber Security Legislative Reforms Consultation Paper from December 2023 to March 2024 and targeted consultation on an Exposure Draft package in September 2024.

This Cyber Security Legislative Package brings Australia in line with international best practice, a significant step towards achieving our vision of becoming a world leader in cyber security by 2030.

And here's how Mr Burke is selling it, with quotes attributable to him:

"The creation of a Cyber Security Act is a long-overdue step for our country, and reflects the government’s deep concern and focus on these threats.

“Australians love the convenience of smart devices at home, but consumers need to know that smart devices are still safe devices.

“We know government has to lead the way on cyber, but we also know we can’t do it alone, which is why these new laws have been consulted extensively with business.

“This legislation ensures we keep pace with emerging threats, positioning individuals and businesses better to respond to, and bounce back from cyber security threats.”

“To achieve Australia’s vision of being a world leader in cyber security by 2030, we need the unified effort of government, industry and the community.”

New Zealand's central bank cut its official cash rate by 0.5 percentage points today.

And Citi economists Josh Williamson and Faraz Syed say they now expect another 0.75 percentage point cut at the bank's November meeting.

"The pace of acceleration in rate cuts was justified on the grounds of ongoing weakness in aggregate demand, as evidenced through various business surveys and liaison feedback," they say.

"We changed our view for November and now expect a 75bps cut, as opposed to 50bps previously."

Master Builders Australia says the ABS data shows 2023-24 was the worst year for home building in more than a decade, dropping 8.8 per cent to 158,690 new starts.

“Detached house starts fell by 10.1 per cent, while higher density commencements were down by 6.0 per cent,” said Master Builders Chief Economist Shane Garrett.

“If building continues at this pace, we’ll be in for less than 800,000 new home starts over the next five years.”

“This would mean a shortfall of over 400,000 homes compared with the National Housing Accord target.”

Master Builders says the ABS data coincides with new data from the National Centre for Vocational Education Research which showed declines in apprenticeship numbers.

Apprenticeship completions fell 8.6% from 24,545 in the year to March 2023 to 22,420 in March 2024.

In the same period, apprenticeship commencements dropped 11.8% from 47,110 to 41,520, and the number of apprentices in training declined 2.2% from 124,280 to 121,530.

Master Builders Australia CEO Denita Wawn said the new data painted a concerning picture for Australia's housing crisis.

“Today’s data releases aren’t unrelated," she said.

"To bring Australia out of the housing crisis we need to drastically increase the supply of housing, and we can’t do that while we’re simultaneously suffering through a labour shortage.

“Low apprentice numbers reflect a shortage of skilled workers across all trades, and until we’re able to address the challenges facing the future of the workforce, we won’t be able to increase building activity and reduce the impact of supply conditions in the residential building market on Australia’s inflation problem.

“It’s no longer appropriate to call for a return to pre-Covid levels, we need more tradies now than we’ve ever had.

“We urgently need governments to look at solutions to increase the number of tradies, increase the number of apprentices, and help Australian builders increase supply so we can come out the other side of this housing crisis,” Ms Wawn said.

The Australian Bureau of Statistics released new data earlier today, which I didn't get time to look at.

It was building activity for the June quarter.

It says there were 44,853 dwellings completed in the June quarter (seasonally adjusted) (private new houses accounted for 28,228 dwellings, other residential accounted for 15,691 dwellings):

The total number of dwellings commencedwas 40,293 dwellings in the June quarter, in seasonally adjusted terms:

The total number of dwellings currently under construction was 221,533 in the June quarter, of which 88,235 were new houses:

And the total value of work done fell 0.2% to $34 billion in the June quarter, in seasonally adjusted terms.

The decrease was driven by new residential building, which fell 0.4% to $17.1 billion. Work done on non-residential building fell 0.2% to $14.1 billion (it's 0.4% higher for the year). Work done on alterations and additions to residential buildings rose 0.6% to $2.8 billion:

People were very into my article yesterday (below) about a landmark High Court ruling that could radically reshape the concept of individual responsibility when things go wrong inside companies.

It could change the situation where broad scandals and Royal Commissions uncover egregious conduct but there are no consequences for individuals.

Much smarter than me is Minter Ellison partner Ryan Solomons, and these are some of his seven key takeaway thoughts on the issue.

Key takeaways

1. A company can be held liable for unconscionable conduct (very bad behaviour) under section 21 of the Australian Consumer Law if its systems are designed in a way that maximises benefit to the business while risking or actually causing harm to consumers with no corresponding or appropriate benefit to them and without protecting a legitimate commercial interest.

2. Guidance as to allowable conduct can be taken from relevant industry codes and standards, for example, the Franchising Code.

3. It is irrelevant whether the risk or harm was intended by the company.

4. It can be relevant whether or not a party acted in good faith in all the circumstances.

5. There is not any prohibition on being profitable or doing a good deal, however getting one over on someone or sharp practice may now be prohibited if it is unfair to do so in all the circumstances.

6. Thorough record keeping and in turn discovery will be required in any litigation.

7. Advice should be sought on appropriate measures and procedures to put in place and the reasons for them should be recorded.

New Zealand's economy shrank by 0.2% in the June quarter, bringing its annual growth rate to -0.5%.

Last month, Westpac NZ senior economist Michael Gordon said he expected the RBNZ to cut its official cash rate by 0.25 percentage points today.

"While financial markets will no doubt fixate on the idea that the US Fed’s decision this morning has opened the door for 50 basis point rate cuts elsewhere, there isn’t much in the local data that argues for the RBNZ to step up the pace of easing beyond what it had already signalled in its August policy statement," he wrote.

So today's move from the RBNZ has taken some analysts by surprise.

Here's what the monetary policy committee of New Zealand's central bank has to say about the country's domestic activity:

"Members agreed that increasing excess capacity is leading to lower inflationary pressure in the New Zealand economy.

"Economic growth is weak, in part because of low productivity growth, but mostly due to weak consumer spending and business investment.

"High-frequency indicators point to continued subdued growth in the near term. Some exporting businesses have been supported by higher export prices, particularly in the dairy industry.

"Labour market conditions are expected to ease further, with filled jobs and advertised vacancy rates continuing to decline.

"More generally, weak house price growth, lower levels of net immigration, and ongoing fiscal consolidation from spending restraintare expected to constrain aggregate demand growth.

"The Committee noted that while wholesale and bank interest rates have declined, financial conditions remain restrictive, and credit demand remains subdued.

"The current preference for shorter-term mortgage rates by borrowers will increase the speed with which changes in the OCR influence household cashflows over coming months.

"The Committee agreed that monthly price indices signal a continued decline in consumer price inflation in New Zealand.

"Recent business visits suggest that weak demand is restricting the pass-through of increased input costs to prices faced by consumers. This is consistent with business surveys, which show a declining share of businesses intending to increase prices.

"Business price-setting behaviour is now more consistent with the Committee’s inflation remit.

"The Committee assesses headline consumer price inflation to be within its 1 to 3 per cent target band in the September 2024 quarter and to remain around the midpoint in the medium-term."

New Zealand's central bank has cut its official cash rate (OCR) from 5.25% to 4.75%.

Its rate had sat at 5.5% from mid-May 2023 to mid-August 2024. But in mid-August it cut it by 0.25 percentage points, and today it's cut it by 0.5 percentage points.

The graph below shows how things were travelling before today's cut:

Part of the statement from the bank's monetary policy committee reads:

"The Committee assesses that annual consumer price inflation is within its 1 to 3 percent inflation target range and converging on the 2 percent midpoint.

"Economic activity in New Zealand is subdued, in part due to restrictive monetary policy.

"Business investment and consumer spending have been weak, and employment conditions continue to soften. Low productivity growth is also constraining activity.

"The New Zealand economy is now in a position of excess capacity, encouraging price- and wage-setting to adjust to a low-inflation economy. Lower import prices have assisted the disinflation.

"The Committee agreed that it is appropriate to cut the OCR by 50 basis points to achieve and maintain low and stable inflation, while seeking to avoid unnecessary instability in output, employment, interest rates, and the exchange rate."

That was really detailed, but it was good to step through it.

In summary, the RBA says its Term Funding Facility achieved its goals during the pandemic.

It says it would be open to using a similar facility in a future emergency, but it would use some of the lessons it learned from the experience to make it better.

The TFF provided $188 billion of funding.

There were financial costs associated with the facility - it cost the RBA $9 billion. The TFF was profitable for the RBA until May 2022, when the cash rate increased, but after that point the RBA was paying banks more interest for the balances that they kept at the RBA than the low fixed rate the banks were paying on the TFF.

The RBA Board decided to extend the TFF in early September 2020, but at that time the banks had taken up just 60 per cent of their initial TFF allowances. This suggests that the banks didn't need the TFF to be extendedto help them meet demand for borrowing from households and businesses (butthe Board extended the facility and increased banks’ allowances; banks could access their new allowances for three-year fixed-rate loans until mid-2021).

From Chris Kent's speech:

Summing up:

The TFF met the objectives we set out for it at the start of the pandemic.

It helped prevent dire economic outcomes at a time when the outlook was bleak and highly uncertain, and there was limited scope for further cuts to the cash rate.

The TFF contributed to materially lower lending rates for households and businesses by reducing funding costs directly for banks, and indirectly for other institutions that borrow from wholesale funding markets.

It kept credit flowing to households and businesses at a time when banks might have otherwise curtailed lending.

In helping to prevent a much more severe economic downturn, the TFF also contributed to stronger public sector balance sheets than otherwise.

Would the RBA use a term-lending tool again in the future?

The board would consider such a tool in extreme circumstances when the cash rate target had been lowered to the full extent possible.

But it would do so only after consideration of a wide range of scenarios and the associated risks, and with a broader range of operational options than were available at the time of the pandemic.

What's next?

In line with recommendations from the review of the RBA, the RBA will be publishing a framework for additional monetary policy tools next year.

The broader set of lessons learned from the combined use of a range of unconventional monetary policies will be considered as part of that framework.

From Chris Kent's speech:

There were valuable lessons we learnt along the way that could help to shape any future program of this type.

Degree of support for the economy versus flexibility:

Central banks can choose between fixed- or variable-rate facilities.

The fixed-rate option was chosen for the TFF in part to reinforce other policies: the yield target and forward guidance. Such policy packages can be particularly valuable when the standard interest rate lever is already near zero and significant downside risks to the economy remain.

But the flipside to a fixed-rate facility is that it lacked flexibility.

And given the large take up of the TFF at a very low fixed rate, it incurred a material financial cost to the RBA when the economic recovery and pick-up in inflation turned out to be much stronger, and started much earlier, than had been expected.

Indirect effects:

Many non-bank lenders were concerned that the TFF would undermine their competitive position vis-à-vis the banks.

We had expected the TFF to help lower rates in wholesale funding markets to a degree. But this effect was much stronger and more pervasive than we had anticipated. The TFF helped to lower funding costs significantly for a range of lenders and corporations that had no access to TFF funds.

It is hard to identify the specific contribution of the TFF to these lower funding costs separately from the effects of the wider policy package.

But staff estimates suggest that these indirect effects caused yields on RMBS to be around 50 basis points lower than they would otherwise have been.

Open lines of communication between the RBA, other government agencies and industry:

Another lesson is the importance of collaboration with other government agencies, and regular contact with industry participants.

Collectively, this helped financial stability risks associated with the TFF to be well managed.

Similarly, for household and business borrowers, the RBA, the Australian Prudential Regulation Authority and the banks’ close monitoring (and banks’ prudent lending standards) helped to reduce the risks associated with the rise in borrowers’ mortgage payments when their very low fixed rates rolled over to much higher variable rates.

Only a very small share of borrowers struggled to meet the increase in their mortgage obligations when their low fixed rates expired.

Importance of contingency planning, risk management and governance:

One of the important lessons is the value of planning ahead and being ready for a wide range of operational contingencies.

We got the TFF up and running quickly in part by relying on existing, well-understood practices.

But the speed with which the RBA designed and implemented the TFF also limited our ability to fully consider and manage the associated risks:

• Forward planning can expand the options available, help us to better weigh up the costs and benefits of each, and prioritise any pre-emptive operational work. On this latter point, for example, floating-rate term-lending would have been challenging for both the RBA and the commercial banks to adopt in early 2020, because neither the RBA nor the banks were readily able to undertake floatingrate repos. The RBA and the banks have since upgraded systems and now have the capacity to easily undertake either floating- or fixed-rate repos.
• Design features could have competition implications. While RBA staff liaised with the Australian Competition and Consumer Commission during the TFF’s setup, it would be helpful to consider competitive implications ahead of time for any future facilities.
• Finally, and perhaps most importantly, the Board has agreed to strengthen the way it considers risks, including by examining a wide range of economic scenarios when making policy decisions involving unconventional tools, and how to judge appropriate exit paths from such tools. In retrospect, a greater focus on potential upside economic outcomes could have led to a different calibration of the TFF, including deciding not to extend it in September 2020.

From Mr Kent's speech:

The TFF was part of the insurance the RBA took out against a catastrophic economic outcome.

While some of the TFF’s design features underpinned its significant use by the banks – and hence its economic benefits more broadly – these were also associated with financial costs for the RBA.

The total cost to the RBA is estimated to have been $9 billion.

There were several reasons for this cost.

First, the choice to supply funds at a fixed rate was intended to give banks and their borrowers certainty, thereby reinforcing the other elements of the policy package: notably the RBA’s three-year yield target, and its forward guidance.

But the economic recovery and increase in inflation turned out to be much stronger, and started much earlier, than the initial upside scenarios considered by most economists and the RBA.

As a result, the board ended up raising the cash rate target by much more and much sooner than had been expected:

While the TFF was profitable for the RBA until May 2022, once the cash rate increased, the RBA was paying banks more interest for the balances that they kept at the RBA than the low fixed rate the banks were paying on the TFF.

Because the banks passed these lower funding costs in full, household and business borrowers who had locked in low fixed rates were the ultimate beneficiaries as interest rates rose.

Second, around $4 billion of this cost was the result of the Board’s decision to extend the TFF in early September 2020.

At that time, the banks had taken up just 60 per cent of their initial TFF allowances, with almost half of that occurring as late as August:

This suggested that the banks did not need TFF funding to compete for, or satisfy, the demand for borrowing from households and businesses.

Rather, the banks waited until as late as practical to draw down TFF funds because doing so extended the time the TFF would contribute to meeting regulatory liquidity requirements on the banks.

A similar pattern of late take-up was later observed with the second tranche of the TFF.

Some lessons for the future

The TFF delivered on its goals.

It lowered borrowing costs for a range of borrowers, kept credit flowing to the economy, and supported aggregate demand.

In addition, along with other measures – including the purchase of bonds in the early weeks of the pandemic – it helped to restore confidence in financial markets, which were significantly disrupted in the early days of the pandemic.

Based on the findings of the review, the Board judged that a term lending tool of this kind would be worth considering again if warranted by extreme circumstances.

But there were valuable lessons we learnt along the way that could help to shape any future program of this type.

What were those lessons?