BANKS AND BANKING

RBA’s ultra-low rate loans barely boosted lending

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Original article by Ronald Mizen
The Australian Financial Review – Page: 2 : 14-Dec-22

The Reserve Bank of Australia’s approach to monetary policy during the COVID-19 pandemic is continuing to attract scrutiny. RBA analysts have undertaken a review of the central bank’s Term Funding Facility, which offered ultra-low interest loans to banks with the aim of providing support to businesses during the pandemic-induced economic downturn. The analysts concluded that there was little evidence that the TFF had increased overall lending, particularly to the small and medium enterprise sector.

CORPORATES
RESERVE BANK OF AUSTRALIA

Governor’s mea culpa for flawed interest rates guidance

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Original article by Patrick Commins
The Australian – Page: 5 : 29-Nov-22

Reserve Bank governor Philip Lowe has used an appearance before a Senate estimates hearing to apologise for the RBA’s flawed guidance during late 2020 and most of 2021 that interest rates would not go up until 2024. However, he stated that its advice at the time needed to be taken into context, noting it was the height of the pandemic, and the dire situation that the country was in suggested to the RBA that inflation was unlikely to pick up quickly. Lowe also said he was "very glad" that workers were getting higher pay, while he did not think that labour costs would increase sufficiently enough to cause a 1970s style wage-price spiral.

CORPORATES
RESERVE BANK OF AUSTRALIA

NZ Reserve Bank nails our RBA’s failure

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Original article by Terry McCrann
Herald Sun – Page: 49 : 24-Nov-22

Reserve Bank of Australia governor Philip Lowe has stated that wage outcomes must be consistent with the return of inflation to the central bank’s target range of 2-3 per cent. Increasing wages in line with the inflation rate would inevitably result in large-scale job losses and further boost inflation. Allowing inflation to remain well above the target range for too long would also heighten the risk of a wage-price spiral. The Reserve Bank of New Zealand recognises these risks; its cash rate was increased by 75 basis points on Wednesday, and it seriously considered a one per cent increase. In contrast, the RBA increased the cash rate by just 25 basis points in November, despite the inflation rate in both countries being nearly identical. NZ’s cash rate is now 4.25 per cent, but Australia’s cash rate will still be just 3.1 per cent if – as expected – the RBA announces a 25 basis point increase in December.

CORPORATES
RESERVE BANK OF AUSTRALIA, RESERVE BANK OF NEW ZEALAND

Economists tip supersized Cup day rate rise

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Original article by Ronald Mizen
The Australian Financial Review – Page: 11 : 28-Oct-22

Westpac’s chief economist Bill Evans expects the Reserve Bank of Australia to increase the cash rate by 50 basis points in November, in response to the latest inflation data. Westpac now anticipates that official interest rates will peak at 3.85 per cent, a view shared by the Commonwealth Bank. National Australia Bank and ANZ in turn expect interest rates to peak at 3.6 per cent and 3.1 per cent respectively. Meanwhile, financial markets have priced in a 25 basis point increase in November.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

No doubt interest rates will continue to climb: RBA

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Original article by Ronald Mizen
The Australian Financial Review – Page: 2 : 19-Oct-22

The Reserve Bank of Australia’s deputy governor Michele Bullock says inflation is still too high and further rises in the cash rate will be necessary in order to return it to the RBA’s target range of 2-3 per cent. Bullock has told the Australian Finance Industry Association’s annual conference that the RBA believes that it can reduce the inflation rate while avoiding a recession and preserving most of the jobs that have been created in recent times. Meanwhile, the minutes from the RBA’s latest meeting show that the board was of the view that slowing the pace of rate rises in October will give it time to assess incoming economic data.

CORPORATES
RESERVE BANK OF AUSTRALIA

RBA slows its rate pace from breakneck to merely galloping

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Original article by Patrick Commins
The Australian – Page: 1 & 4 : 5-Oct-22

Reserve Bank of Australia governor Philip Lowe has indicated that further interest rises are likely as the central bank seeks to bring inflation under control. The RBA defied the expectations of most economists and investors by increasing the cash rate by just 25 basis points on Tuesday, lifting it to 2.6 per cent. The RBA has become the first major central bank to scale back the size of interest rate increases in the current monetary policy tightening cycle, having increased the cash rate by 50 basis points at each of its previous four monthly board meetings. Australia’s four major banks have increased their variable mortgage interest rates by 25 basis points in line with the cash rate.

CORPORATES
RESERVE BANK OF AUSTRALIA

Interest rates: Ghost of ’89 may come to haunt us

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Original article by Patrick Commins
The Australian – Page: 2 : 4-Oct-22

National Australia Bank’s chief economist Alan Oster expects the cash rate to rise by 50 basis points on Tuesday, followed by a 25 basis point increase in November. However, he warns that the nation could pay a heavy price for a "policy mistake" by the Reserve Bank of Australia’s board, noting that the central bank’s aggressive tightening of monetary policy in 1989 ultimately led to a recession and a sharp rise in the unemployment rate. Oster is not predicting a recession in Australia at this stage, but he says the worsening global economic outlook will inevitably have an impact in Australia.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RESERVE BANK OF AUSTRALIA

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.

CORPORATES
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.

CORPORATES
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.

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