The Reserve Bank of Australia has stoked hopes of a further interest rate cut by stressing that inflation must be kept low and that non-mining businesses needed to grow in order to keep unemployment down.

 

Philip Lowe, the RBA’s deputy governor, told a Davos Connection forum in Melbourne that growth in non-mining businesses needed to jump 0.75% to 1% in order to keep a lid on unemployment.

 

Shares plummet in Europe over Greek deadlock

 

Shares have plummeted across Europe following political deadlock in Greece, with the country considering whether to exit the euro.

 

Markets in London, Paris and Frankfurt all dipped as Greek political leaders attempted to form a government following election results that showed growing support for anti-austerity parties.

 

Howes warning over union movement

 

Australian Workers Union national secretary Paul Howes has warned that the union movement is at “breaking point” because it has failed to modernise.

 

Howes told the ACTU Youth Congress that the Health Services Union scandal, which has embroiled Labor MP Craig Thomson, had damaged all unions in the eyes of young people.

 

“We have to ensure that we never allow something like this to happen again, because if it does that could be the thing that wipes us off the map,'' he said.

 

Overnight

 

The Dow Jones Industrial Average dropped 125.40 points, or 0.98%, to 12,695.20. The Australian dollar slid below parity, to 99.70 US cents.