Latest news with #WarwickMcKibbin
ABC News
09-07-2025
- Business
- ABC News
Why interest rates should be higher despite tariff uncertainty, says former RBA member
Emeritus professor of public policy and economics at the ANU, and former RBA board member Warwick McKibbin discusses Donald Trump's on again, off again tariff policy and explains why he believes Australia's neutral interest rate should be around 4%.
Hans India
08-07-2025
- Business
- Hans India
Global tariff disruption is opportunity to lower trade barriers: Australian economist
Jakarta: The global trade disruption driven by US tariffs is an opportunity for Australia to lower trade barriers, according to a leading economist. Warwick McKibbin, director of the Center for Applied Macroeconomic Analysis at the Australian National University, said on Monday that Australia is in "probably the best position" of any country to handle the economic fallout of President Donald Trump's widespread tariffs. He told the Australian Conference of Economists that Australia should be looking at Trump's plan to introduce further tariffs from August 1 as an opportunity to expand trade with other nations, reports Xinhua news agency. "We should be doing trade negotiations. We should be lowering barriers which make trade harder," McKibbin said. Following the announcement of Trump's first tariffs in April, Australia's federal government reopened negotiations with the European Union (EU) on a free trade agreement. Talks previously broke down in 2023 when the two sides could not reach an agreement over access to Australian agricultural products in the EU market. Australia's Minister for Trade and Tourism, Don Farrell, said in June that he is hopeful that countries that believe in free and fair trade can reach deals to extend free trade agreements to ensure a greater diversity of trading partners, irrespective of what the US "might choose to do." An annual review of trade published on Tuesday by the Productivity Commission, the federal government's principal economic advisory body, found that removing Australia's remaining trade barriers could save businesses 4 billion Australian dollars (2.5 billion US dollars) in compliance costs every year. "Removing Australia's remaining tariffs would maximise the benefits to Australian production from other countries imposing tariffs," it said. It found that the global effects of US tariffs could drive a 0.37 per cent increase in Australia's gross domestic product but warned that the benefit would be minor compared to the costs associated with growing economic uncertainty.
The Guardian
07-07-2025
- Business
- The Guardian
Trump tariff disruption could have ‘small, positive effect' on Australian economy, productivity commission finds
Donald Trump's trade tariffs will have only a minor impact on our economy according to the Productivity Commission, as a leading economist said Australia was in the 'best position' in the world to withstand the surge in US protectionism. The American president on Tuesday morning posted a series of letters which outlined individual countries' tariff rates that were close to previously announced levels, while extending the negotiation deadline from 9 July to 1 August. As the world braces for potentially another three more of disruption and speculation about where tariffs will eventually land, Warwick McKibbin, an ANU economics professor, said the good news was that 'Australia's in probably the best position to handle' the fallout from the Trump's assault on global trade. McKibbin, who is a recognised world leader on modelling the potential impact from America's new era of trade protectionism, told the Australian Conference of Economists on Monday that Australia should be looking at these disruptions as an 'opportunity' to expand trade with our partners. 'We should be doing trade negotiations. We should be lowering barriers which make trade harder,' he said. McKibbin's conclusion that Australia would be left relatively unscathed by US-led trade disruptions was backed up by separate PC analysis which showed our economy could even receive a small boost from America's higher trade barriers. The PC's modelling found that retaliating with our own tariffs would be counterproductive, and that the best response was to pursue reforms at home to boost the productive potential of Australia's economy. With Anthony Albanese yet to meet the US president in person, Jim Chalmers in a statement said the PC's conclusions backed the government's approach to American protectionism. Jim Chalmers said 'the key message from the PC review is that Australia is best served by continuing to advocate for free and fair trade, and that's exactly what we've done'. James Paterson, the shadow finance minister, told Channel 9 that 'the only fair tariff on Australia would be 0%, and I hope that's what we get'. 'But we haven't given ourselves the best chance of securing that from the Trump administration because the prime minister has not even met President Trump, now seven months after he was elected,' Paterson said. The PC modelling found the 'small, positive effect' on Australia's economy comes about as goods previously sold to the US are diverted to us at a cheaper rate, and as we also scoop up some of the investment that flows out of America and heavily tariffed countries. But Alex Robson, the PC's deputy chair, warned the 0.4% modelled lift in GDP did not account for other, harder to model knock-on effects. 'The proposed tariffs are likely to have a relatively small direct effect on us, but the global uncertainty they've brought about could affect living standards in Australia and around the world,' Robson said. Trump's letters he posted on social media threatened tariff rates of 25% on Japan, South Korea, and Malaysia, all within 1 percentage point of previously threatened tariffs. Tapas Strickland, NAB's head of market economics, said there were some early clues about where import tax rates may eventually settle. 'If the agreement with Vietnam is anything to go by, then countries where the US has a trade deficit with look destined to have a 20% tariff, and those where the US has a trade surplus with a 10% tariff,' Strickland said. 'That could mean eventual tariff rates settle higher than what the current consensus is which is broadly for a 10% across the board tariff with a higher tariff on China.'
Bloomberg
15-05-2025
- Business
- Bloomberg
Ex-RBA Board Member Urges Rate Pause Over Excess Fiscal Spending
Australia's 'very large' fiscal stimulus at a time when monetary policy is around neutral — neither stimulating nor slowing economic activity — suggests the Reserve Bank should keep interest rates unchanged next week, former board member Warwick McKibbin said. At the same time, elevated global uncertainty driven by US President Donald Trump's tariff program means the 'wise move' would be to stand pat at 4.1%, said McKibbin, who served on the RBA's board from 2001 to 2011.
Bloomberg
15-05-2025
- Business
- Bloomberg
RBA Urged to Defy Expectations And Keep Rates on Hold
Good morning, it's Amy here in Melbourne with your Friday newsletter. Today's must-reads: • Ex-RBA board member urges rate pause • Our latest podcast on banks • Rio Tinto's aluminum plans Former Reserve Bank of Australia board member Warwick McKibbin thinks the central bank should keep interest rates unchanged next week. He spoke with my colleague Swati Pandey, citing fiscal stimulus and global uncertainty. Most economists and traders expect the RBA to cut its key rate to a two-year low of 3.85% on Tuesday.
