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Australian Lending Unexpectedly Shrinks, Threatening Recovery
Friday, 30 October 2009 01:51 GMT  |  Written by Ilya Spivak
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Australia’s Private Sector Credit unexpectedly shrank for the first time in nine months September, dropping -0.2%. In annual terms, lending grew 1.7%, the slowest in 16 years. Details of the report proved ominous: business lending fell -1.3%, the most since December, hinting at hiring and output in the months ahead. The situation will be all the more difficult considering the Reserve Bank of Australia (RBA) is poised to continue raising benchmark interest rates after becoming the first central bank in the G20 to do so this month in the aftermath of last year’s global financial crisis and credit crunch. The markets still bet that the RBA will raise rates by 25 basis points next week but traders’ conviction is on the wane, with a Credit Suisse gauge of priced-in rate hike expectations down 28.2% over the past two weeks.


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