BANKS AND BANKING

Higher interest rates tipped to bite

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Original article by Ronald Mizen
The Australian Financial Review – Page: 1 & 4 : 3-Aug-22

Reserve Bank of Australia governor Philip Lowe has reiterated that higher interest rates are necessary to return inflation to the target range of 2-3 per cent and to create a sustainable balance of demand and supply. Financial markets are now pricing in a cash rate of three per cent by December, following the RBA’s third consecutive increase of 50 basis points on Tuesday. The cash rate is now at a six-year high of 1.85 per cent, and many economists expect a rate rise of either 25 or 50 basis points in September. Meanwhile, the RBA has downgraded its economic growth forecast for both 2023 and 2024 to just 1.75 per cent, while it expects the official unemployment rate to reach four per cent by the end of 2024.

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RESERVE BANK OF AUSTRALIA

Chalmers seeks more RBA board diversity

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Original article by John Kehoe
The Australian Financial Review – Page: 3 : 27-Jun-22

The independent review of the Reserve Bank of Australia is slated to report to the federal government in mid-2023. Treasurer Jim Chalmers has indicated that the size and composition of the RBA’s board are among the issues that will be considered; he says the government wants the board to be comprised of people representing all parts of Australia and all parts of the economy. The RBA board is currently dominated by people from the business sector, but there have been calls for it to include more economists. ACTU secretary Sally McManus has in turn advocated having a union representative on the board for the first time since the 1990s.

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RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, ACTU

Lowe prompts double jump in rate forecasts

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Original article by Alex Gluyas
The Australian Financial Review – Page: 27 : 16-Jun-22

Financial markets have now fully priced in a 50 basis point increase in the cash rate at the Reserve Bank of Australia’s monthly board meeting in July. Financial markets also expect official interests to rise to four per cent by early 2023, compared with just 0.85 per cent at present. Investment bank Goldman Sachs expects the cash rate to rise by 50 basis points in July and the following two months; it had anticipated 25 basis point rate rises in August and September prior to recent comments by RBA governor Philip Lowe regarding the outlook for inflation and interest rates.

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RESERVE BANK OF AUSTRALIA, GOLDMAN SACHS AUSTRALIA GROUP HOLDINGS PTY LTD

RBA opens door to 2022 rate rise

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Original article by Ronald Mizen
The Australian Financial Review – Page: 1 & 4 : 3-Feb-22

Reserve Bank of Australia governor Philip Lowe has signalled that official interest rates could potentially rise before the end of 2022 if the economy continues to perform well. However, he has downplayed suggestions that the cash rate may be increased four times in 2022, arguing that Australia’s inflation rate is still well below that of countries such as the US and the UK. Lowe also said that the unemployment rate could soon fall below four per cent. The Commonwealth Bank still expects the cash rate to be increased in August.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Lowe keeps nation guessing on rates

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Original article by Patrick Commins
The Australian – Page: 1 & 5 : 2-Feb-22

Reserve Bank of Australia governor Philip Lowe has downplayed speculation that official interest rates will rise in 2022. Lowe stated that although inflation has increased, it is not yet sustainably within the central bank’s target range of 2-3 per cent. This has been identified as a prerequisite for increasing the cash rate, which was left at a record low of 0.1 per cent on Tuesday. The RBA will also end its quantitative easing program. Meanwhile, Lowe has forecast that core inflation will peak at 3.25 per cent, compared with 2.6 per cent at present, while he expects the unemployment rate to fall below four per cent later in 2022.

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RESERVE BANK OF AUSTRALIA

Economists give Lowe a pass for 2021, except for one thing

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Original article by Ronald Mizen
The Australian Financial Review – Page: 3 : 7-Jan-22

A survey of 23 economists regarding their views on the performance of the Reserve Bank in 2021 has seen RBA governor Philip Lowe score 72.5 per cent for his leadership. The RBA scored 76 per cent on management of monetary policy, while its communication of policy and intentions scored 66 per cent. The only area in which the economists felt that the RBA failed was in regards to its termination of its policy to suppress the yield on three-year Treasury bonds, which received only 41 per cent support.

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RESERVE BANK OF AUSTRALIA

New Covid variant could hit RBA’s plans to taper

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Original article by Ronald Mizen
The Australian Financial Review – Page: 8 : 22-Dec-21

The minutes of the Reserve Bank of Australia’s monthly board meeting for December show that the central bank remains upbeat about the outlook for the economy. The RBA does not expect the new Omicron variant of COVID-19 to "derail" the nation’s economic recovery. However, the variant may affect the RBA’s timetable for winding back quantitative easing.

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RESERVE BANK OF AUSTRALIA

Economists cast doubt on central bank’s view

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Original article by Cecile Lefort
The Australian Financial Review – Page: 27 : 20-Oct-21

The minutes of the Reserve Bank of Australia’s latest monthly board meeting show that it still expects the cash rate to remain on hold until 2024, when inflation is forecast to be sustainably within its target range of 2-3 per cent. However, the consensus of economists is that the central bank will begin tightening monetary policy in mid-2023. Judo Bank’s chief economist Warren Hogan says the first rate rise could potentially be in November 2022, while Su-Lin Ong of RBC Capital Markets expects a rate rise in the December 2023 quarter.

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RESERVE BANK OF AUSTRALIA, JUDO BANK PTY LTD, RBC CAPITAL MARKETS

RBA: Economy to bounce back

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Original article by John Kehoe
The Australian Financial Review – Page: 1 & 6 : 8-Sep-21

Reserve Bank of Australia governor Philip Lowe has warned that GDP is likely to decline "materially" in the September quarter due to COVID-19 lockdowns. However, he believes that the economy will rebound as vaccination rates increase and restrictions are eased, and growth in the December quarter will allow Australia to avoid a technical recession. The central bank left official interest rates on hold at 0.1 per cent at its September board meeting; it has also advised that its bond-buying program will be maintained at the current level until at least February 2022.

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RESERVE BANK OF AUSTRALIA

RBA may rethink tapering as lockdowns bite

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Original article by David Rogers
The Australian – Page: 19 : 21-Jul-21

The Reserve Bank of Australia recently signalled that it will begin scaling back its bond-buying program in September, amid the nation’s stronger-than-expected economic recovery from the COVID-19 pandemic. However, economists at a number of banks anticipate that the potential economic impact of the latest wave of lockdowns will prompt the central bank to delay plans to slash its bond-buying program by $1bn a week. Gareth Aird from the Commonwealth Bank says the RBA could potentially start to reduce its bond purchases in November.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMS GROUP LIMITED – ASX CCG