THE NEWS WRAP: RBA governor calls for the dollar to fall to US85 cents

Reserve Bank governor Glenn Stevens has predicted the Australian dollar will fall towards US85 cents, but warned real economic growth will also require cuts tow ages in real terms.

“I thought US85 cents would be closer to the mark than US95 cents. . . but really, I don’t think we can be that precise,” Stevens says.

“I just think that if things over the medium term evolve as we’re presently assuming – and I think it’s reasonable to make these assumptions – it’s going to be surprising if a nine at the front is the right number.

“To the extent that we get some more easing in financial conditions, at this point it’s probably more preferable for that to be via a lower currency at the margin than lower interest rates.”

General Motors wanted an extra $80 million per year to stay in Australia

General Motors Holden made the decision to leave Australia after the federal government rejected a request for an extra $80 million per year subsidy, according to reports.

Fairfax is reporting Holden managing director Mike Devereux made the request during a meeting on October 2 with federal Industry Minister Ian Macfarlane, South Australian Premier Jay Weatherill and the state’s Manufacturing Minister, Tom Kenyon.

The $80 million per year would have come on top of the $40 million Automotive Transformation Fund and $275 million in other subsidies, and would have kept the auto maker in Australia until 2022.

Kellogg’s set to close Central Coast factory

Food giant Kellogg’s has announced it is closing its factory on the New South Wales Central Coast by the end of next year, with around 100 jobs set to be lost.

The timing of the announcement, just weeks before Christmas, has drawn criticism from Wyong mayor Doug Eaton.

“They could have shown a bit more sympathy, I think,” Eaton says.

“A month or two probably in the scheme of things doesn’t make any difference.”

Overnight

The Dow Jones Industrial Average is down to 5069.2. The Aussie dollar is down to US89.36 cents.