Mr Macfarlane’s term will come to an end end in October this year.

The Treasurer would not be drawn today on just when a replacement will be named but paid tribute to the role the current governor has played.

“Ian Macfarlane has been an outstanding Reserve Bank governor, no doubt about that,” he said.

“I have great confidence in him – I hope that that he can continue to serve Australia.

“He’ll become a private citizen, what he wants to do is his business, but from the Government’s point of view, if we could harness his talents, yes we’d love to.”

“It’s all about interest rates; fears of hikes have heightened and that’s what spooked the market,” said Aequs Securities head of institutional trading Ric Klusman.

The May jobless rate of 4.9 percent was the lowest in Australia since November 1976, according to the Department of Employment and Workplace.
The figure came in well below market expectations of an unchanged unemployment figure, which stood at 5.2 percent in April.

According to the Australian Bureau of Statistics, the number of people employed jumped a seasonally-adjusted 56,000 to 10.14 million, compared with consensus forecasts of a 12,500 rise. It was the 12th time the data showed more than 10 million employed in the country.

Prime Minister John Howard described the figures as very encouraging.
“I am delighted that we have finally got the unemployment rate with a four in front of it,” he told reporters in Sydney.
“It is only one month’s figures but the symbolism of it is important and the long-term trend is very encouraging.”

Analysts warned, however, that if the jobless rate continued to fall, the Reserve Bank of Australia could be forced to again raise interest rates to curb inflationary pressure in the economy.

The data, and fears that interest rates will rise in the United States, caused the key SP/ASX 200 to drop 118.3 points to close at 4,907.2, well-off the May 11 record close of 5,364.5. The broader All Ordinaries Index shed 113.4 points or 2.27 percent to close at 4,878.5.
“Certainly financial markets are pricing in the risk that rates will have to rise,” Craig James, chief equities economist at CommSec told AFP.

“If this month’s data is followed by another strong set of jobless figures, then the Reserve Bank would probably have to step in with a modest rise in interest rates.”
Mark Rodrigues, ANZ Banking Group senior economist, agreed.
“With core inflation in the top half of the RBA’s target band and economic growth around potential, this supports our view that interest rates will need to rise again this year,” he said.

The RBA raised its official cash rate by a quarter percentage point in May — the first hike in the key rate in 14 months.
The move was seen as a preemptive strike to prevent strong global economic growth, high oil prices and upward wage pressures from feeding through to the Australian economy and fuelling inflation, which stands at 3 percent.

On Wednesday, the RBA left its cash rate unchanged at 5.75 percent following its monthly policy meeting but economists said the bank maintains a tightening bias that was likely to have been reinforced by the latest economic growth figures. The economy grew by a stronger-than-expected 0.9 percent in the March quarter, bringing the annual growth rate to 3.1 percent.

SOURCE: AFP

The Victorian County Court heard that Vince Ficarra told his boss on the foreign exchange options desk, Luke Duffy, that he was not impartial to telling lies as the traders continued to hide losses by entering one-sided false trades.

Ficarra, 27, of North Fitzroy, and David Bullen, 34, of Eversley near Ballarat, have pleaded not guilty to charges of gaining financial advantage by deception.

In his summing up, crown prosecutor Dr Greg Lyon SC told the jury that Ficarra would have continued to try to trade his way out of trouble rather than crystallise the $12 million loss he had made by January 2004.

“He was putting planks over the abyss,” Dr Lyon said.

“(Ficarra and Bullen) had pulled the wool over management’s eyes.”

He said the defence had argued that if the bank had been gutsy and held on to the positions, things would have turned in their favour.

“It is contrary to evidence and just plain fanciful,” Dr Lyon said.

He said two junior traders on the desk, Vanessa McCallum and David Gentilin, were not a party to the manipulation of trades that were undertaken to take out volatility in the profit and loss account.

Duffy, 36, and another trader Gianni Gray, 35, had pleaded guilty in other courts and had been dealt with.

“Ms McCallum and Mr Gentilin were not comfortable and at least Ms McCallum had the courage and moral integrity to stay out,” Dr Lyon told Judge Geoff Chettle.

He said Ficarra could not hide behind the claim that he was only carrying out Duffy’s instructions.

“If Duffy was the mentor, if he was the leader, he was not one Ms McCallum slavishly followed,” Dr Lyon said.

“It’s treating us all as fools to suggest others on the trading desk could only learn from Duffy and that all sense of right and wrong is left at the door when you start your first job.”

He said Mr Gentilin blew the whistle on the phoney trades on January 9, 2004, by reporting to the global manager of the trading desk.

He said the trade value report for that day showed a loss of $160 million.

“That report is the smoking gun, a stark demonstration of what this was all about,” Dr Lyon said.

“Ficarra put through trade entries of $US9.7 million or a loss of $12 million.

“You can’t suggest that he didn’t fear for his own position, it is ridiculous to suggest that he thought he was acting honestly.”

Bullen, who is defending himself, said management was partly to blame for the way the desk behaved and this was shown by the departures of his immediate superiors, along with chief executive Frank Cicutto and chairman Charles Allen.

“You can’t say they lost their jobs because they were not responsible,” Bullen said.

He told the jury that he could see where the situation was heading as trading worsened but he did not attempt to leave the bank.

He said allegations that he acted dishonestly were incorrect assertions on his character and his actions.

“I consider it a better outcome to go to jail than to keep my job,” he said.

“Seemingly unfair things happen to undeserving people and I am only interested in avoiding rebirth as an animal or something worse in the next life.

“It would clear away bad karma going to jail so for me it will be even more beneficial.”

SOURCE: AAP

JON’S COMMENTS
This scandal has been discussed in Australia for a while now and honestly, I just can’t believe that it had gone unotice by management for that long! I could have traded better with my own strategy, Forex Fighter, than these 2. But I am surely not there to help banks make more profits!