Australia unveils second stimulus package, slashes rates

Australia slashed rates and unveiled a $26 bln stimulus on Tuesday as authorities stepped up efforts to revive foundering economies. The government more than doubled its initial stimulus, bringing the total package to more than $49 bln or nearly 8 percent of the economy's annual output to stave off a recession already engulfing much of the rich world.
With the United States, Japan, Britain and Europe all officially in recession, surveys on Monday showed a worldwide manufacturing slump eased in January, but other data painted a picture of a painful global downturn still in full swing.
In particular, the outlook for U.S. consumer spending, which accounts for two-thirds of the world's biggest economy, remained weak. Spending rose just 3.6 percent in 2008 as a whole, the smallest increase since 1961.
Australia said it would spend A$42 bln on infrastructure, schools and housing, as well as cash payments to low and middle-income earners, and halved its 2008/09 growth forecast to 1 percent.
Later, as had been widely expected, the Reserve Bank of Australia cut its benchmark interest rate by 100 basis points to a record low 3.25 percent. The bank has now eased policy by a massive 4 percentage points since September.