AUSTRALIA – ECONOMIC CONDITIONS

Cash rate could fall below 1pc, UBS says

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Original article by David Rogers
The Australian – Page: 28 : 19-Mar-19

George Tharenou of UBS says the Reserve Bank of Australia should immediately reduce the cash rate by 50 basis points to one per cent, given the state of the economy and the housing market. Tharenou adds that the central bank should also signal that it is prepared to cut official interest rates even further in order to avoid a market shock later on. He has also not ruled out measures such as quantitative easing. Tharenou expects rate cuts in July and August, although he says weak labour market data could force its hand earlier.

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

RBA could jump rates gun: UBS

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Original article by Samantha Bailey
The Australian – Page: 28 : 26-Feb-19

UBS still expects the Reserve Bank of Australia to reduce the cash rate in November 2019 and February 2020. However, UBS has warned that there is potential for monetary policy to be eased sooner if domestic and global conditions justify such a move. These include a further downturn in house prices and a rise in the unemployment rate.

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD

RBA will ignore gloom and stay a growth hawk

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Original article by James Glynn
The Australian – Page: 23 : 25-Jan-19

The Reserve Bank of Australia is tipped to scale back its economic growth forecasts for 2019 and 2020, after GDP growth was just 2.8 per cent year-on-year in the December 2018 quarter. The RBA had previously forecast growth of 3.5 per cent for 2018. However, the central bank is expected to maintain its hawkish stance, given that the unemployment rate eased in December. The strong labour market also means an increase in the cash rate is more likely than a cut.

CORPORATES
RESERVE BANK OF AUSTRALIA

Mortgage rates are going up as house prices are falling and that’s unusual à and a worry

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Original article by Stephen Letts
abc.net.au – Page: Online : 2-Sep-18

House prices are falling at the same time as mortgages are increasing, and this does not happen often in Australia; the last time it occurred was in 2008. Mortgage rates were higher at that time than they are now, while unemployment was lower back in 2008. As is currently the case, the main reason why banks increased their mortgage rates back in 2008 was due to funding costs, rather than because of Reserve Bank action. Paul Dales from Capital Economics says the three conditions that could see Australia face a recession or financial crisis in the next few years are currently all present: higher mortgages; falling house prices; and a tightening of credit.

CORPORATES
RESERVE BANK OF AUSTRALIA, CAPITAL ECONOMICS LIMITED, WESTPAC BANKING CORPORATION – ASX WBC, SUNCORP GROUP LIMITED – ASX SUN, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, BANKWEST, ROYAL BANK OF CANADA

ALP inequality claims sunk

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Original article by Adam Creighton
The Australian – Page: 1 & 6 : 29-Aug-18

The Productivity Commission has released a report which concludes that inequality in Australia has not increased significantly over recent decades. The report found that real incomes increased by an average of more than two per cent annually between 1989 and 2016. Chairman Peter Harris says all income groups have benefited to some extent from Australia’s economic growth over the last 27 years. However, he notes that nine per cent of Australians are living in poverty. Shadow treasurer Chris Bowen claimed in 2017 that income inequality was at its highest level in 75 years.

CORPORATES
AUSTRALIA. PRODUCTIVITY COMMISSION, AUSTRALIAN LABOR PARTY, COMMITTEE FOR ECONOMIC DEVELOPMENT OF AUSTRALIA, NATIONAL PRESS CLUB (AUSTRALIA), UNIVERSITY OF MELBOURNE. INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH

RBA can just sit back and watch the Fed

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Original article by Karen Maley
The Australian Financial Review – Page: 30 : 13-Nov-17

The latest monetary policy statements of the Reserve Bank and the Federal Reserve used identical wording to describe the current state of the Australian and US economies. The Federal Reserve is widely tipped to increase official interest rates again in December, which will allow the Reserve Bank to observe the impact of a rate rise in a low-inflation, low wages growth environment before taking any action of its own. There is no pressing need for the Reserve Bank to act, given that the unemployment rate remains well above that of the US and is not expected to fall in the next two years.

CORPORATES
RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD

Canada has hiked again – will the RBA follow?

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Original article by Patrick Commins
The Australian Financial Review – Page: 28 : 8-Sep-17

Vimal Gor of BT Investment Management says the Bank of Canada’s decision to increase official interest rates for the second time in 2017 has no implications for the Reserve Bank of Australia. However, Annette Beacher of TD Securities says both central banks have expressed similar views on their nations’ respective economies in recent monetary policy statements. Canada and Australia both have low inflation, low growth in wages, high household debt and high exchange rates, but a key difference is Canada’s much stronger growth in real GDP.

CORPORATES
BANK OF CANADA, RESERVE BANK OF AUSTRALIA, BT INVESTMENT MANAGEMENT LIMITED – ASX BTT, TD SECURITIES, ALTIUS ASSET MANAGEMENT PTY LTD, BLOOMBERG LP

Economy on the rise: Morrison

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Original article by David Uren
The Australian – Page: 1 & 4 : 20-Jul-17

Federal Treasurer Scott Morrison will address a conference in Melbourne on 20 July 2017. He will note that key indicators – such as business and consumer sentiment, corporate profits and job advertisements – show that the Australian economy is gaining strength. Morrison will also caution against trying to return the Budget to surplus too quickly, as this could potentially stall economic growth. Meanwhile, Morrison argues that although Australia’s gross debt now exceeds $A500bn, it would be closer to $A1trn if the Australian Labor Party was still in office.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, UNIVERSITY OF MELBOURNE. INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH, RESERVE BANK OF AUSTRALIA, INTERNATIONAL MONETARY FUND

PM’s pitch as business rebounds

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Original article by Adam Creed
The Australian Financial Review – Page: 1 & 2 : 12-Jul-17

National Australia Bank’s latest business survey shows that there was a month-on-month improvement in sales, profits and trading conditions in June 2017. Prime Minister Malcolm Turnbull, who addressed a business forum in London on 11 July, cited the data as proof that the Australian economy is growing and has not been unduly affected by a fall in mining investment. He attributed the continued resilience of the domestic economy to factors such as Australia’s stance on free trade. Shadow treasurer Chris Bowen argues that low wages growth is the main issue of concern for workers.

CORPORATES
AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIAN LABOR PARTY, ARRIUM LIMITED – ASX ARI, PACIFIC INVESTMENT MANAGEMENT COMPANY LLC, HSBC AUSTRALIA HOLDINGS PTY LTD, ENERGYAUSTRALIA PTY LTD, HARVEY NORMAN HOLDINGS LIMITED – ASX HVN, AMAZON.COM INCORPORATED, CITIGROUP PTY LTD, BUSINESS COUNCIL OF AUSTRALIA

Unions need to argue wage rises drive growth, says Swan

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Original article by Phillip Coorey
The Australian Financial Review – Page: 4 : 26-Jun-17

Former federal treasurer Wayne Swan says the Australian Labor Party and the union movement need to better argue the case for improved wages for middle-class workers. Swan will tell the annual ACTU congress that he fears that the Australian middle-class will become like the fast-disappearing US middle-class if wages do not rise. Swan’s comments follow those recently made by Reserve Bank governor Philip Lowe, who said employees need to be more forceful when it comes to asking for wage rises.

CORPORATES
AUSTRALIAN LABOR PARTY, ACTU, RESERVE BANK OF AUSTRALIA, DEMOCRATIC PARTY (UNITED STATES)