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Financial News: S&P Says Australia's Rating At Risk If Govt

S&P Says Australia's Rating At Risk If Govt Opts Stimulus

11/27/2019 - 06:33:00 (RTTNews)

(RTTNews) - S&P Global Ratings said on Wednesday that the Australia's AAA sovereign rating would be at risk if the government deploy fiscal stimulus.

The Reserve Bank of Australia has reduced its key interest rate three times this year, taking the rate to a record low of 0.75 percent. As the benchmark interest rate has moved lower there have been rising calls for fiscal stimulus to support growth, S&P noted.

"If this fiscal stimulus involves substantial spending initiatives and changes the trajectory of the budget, then doing so could increase downward pressure on our rating and outlook for Australia," S&P credit analyst Anthony Walker said.

The rating agency observed that such fiscal spending will underpin the economic growth but it would weaken the fiscal flexibility of the government to respond to future unforeseen economic shocks.

The agency had raised its rating outlook on Australia to 'stable' from 'negative' in 2018.

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