Australia central bank governor calls US tariffs 'very regrettable'

[SYDNEY] A US proposal to slap tariffs on imports of steel and aluminium was "very regrettable" and reprisals from other countries would be damaging, the head of Australia's central bank said on Wednesday.

US President Donald Trump's tariff announcement last week met with warnings of retaliation from the rest of the world and spooked financial investors globally.

"The recent announcement on tariffs by President Trump was very regrettable," Reserve Bank of Australia (RBA) Governor Philip Lowe said in Sydney. "The proposed tariffs are manageable, but reprisals from other countries would be very damaging.

Those concerns have been reflected in global financial markets with investors dumping shares for the safety of gold, cash, the Japanese yen and Swiss francs.

A gauge of world shares fell 4.4 per cent in February and has already started this month on the defensive, while perceived safe haven yen has been on an upward trajectory.

Mr Lowe also found US budget deficits "troubling" when the economy was running so strong, he said in response to a question following a speech to the Australian Financial Review Business Summit in Sydney.

Closer to home, Mr Lowe expects fourth-quarter economic growth to come in a little under 0.5 per cent but added such a result would not change his confidence in the broader outlook.

A Reuters poll of analysts last week showed economists expect gross domestic product (GDP) to have expanded by 0.6 per cent on quarter and 2.5 per cent on year in the December quarter.

However, recent soft indicators have prompted analysts to trim these expectations to rises of around 0.5 per cent and 2.4 per cent, respectively.

The GDP data is due at 0030 GMT Wednesday.

The RBA is still optimistic about "stronger growth" in 2018 than in 2017, helped by a synchronised pick up in global economy.

With the economy "moving in the right direction and interest rates still quite low, it is likely that the next move in interest rates in Australia will be up, not down," Reserve Bank of Australia (RBA) Governor Philip Lowe said.

The RBA held rates at a record low 1.50 per cent for a 17th straight meeting on Tuesday as inflation still remains below its 2-3 per cent target band and the jobless rate remains high despite a recent jobs boom.

The RBA sees only gradual progress in reducing unemployment and inflation. As a result, "the Board does not see a strong case for a near-term adjustment of monetary policy," Mr Lowe said in Sydney.

REUTERS