BANKS AND BANKING

RBA to cut twice more to 0.5pc, say economists

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Original article by Sarah Turner
The Australian Financial Review – Page: 1 & 22 : 30-Sep-19

A quarterly survey of economists shows that there is general consensus that the Reserve Bank of Australia will reduce the cash rate to 0.5 per cent by mid-2020. Most of the respondents expect official interests to be cut by 25 basis points before the end of 2019, followed by another cut by June. However, Shane Oliver of AMP Capital and Alan Oster of National Australia Bank expect a cash of 0.5 per cent at the end of 2019. Futures markets have priced in a 76 per cent chance of a rate cut on 1 October, and fully priced in a rate cut in November.

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

Savings rate hit as banks brace for interest pain

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Original article by Samantha Bailey
The Australian – Page: 17 & 27 : 26-Sep-19

Data from RateCity shows that ANZ, Westpac and ING are among the banks that have reduced their savings rates by up to 25 basis points in the last fortnight. RateCity also notes that the average savings rate is now 1.1 per cent; this compares with 1.57 per cent in May, prior to the Reserve Bank’s back-to-back official interest rate cuts. With the central bank widely tipped to ease monetary policy again in October, Credit Suisse estimates that banks’ at-call deposit rates would have to fall by about 51 basis points to offset the earnings impact of passing the full cash rate cut on to mortgage borrowers.

CORPORATES
RATECITY PTY LTD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, ING BANK (AUSTRALIA) LIMITED, AMP BANK LIMITED, RESERVE BANK OF AUSTRALIA, CREDIT SUISSE (AUSTRALIA) LIMITED, MYSTATE LIMITED – ASX MYS, BANK OF QUEENSLAND LIMITED – ASX BOQ

Economists raise chances of QE

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Original article by David Rogers
The Australian – Page: 17 & 27 : 26-Sep-19

UBS’s chief economist George Tharenou says there is a growing possibility that the Reserve Bank of Australia will have to resort to unconventional monetary policy options. He says the US Federal Reserve is likely to reduce official interest rates by another one per cent over the next year, as US economic growth slows due to the latest round of tariff hikes. This in turn will put pressure on the RBA to further ease monetary policy, and potentially resort to measures such as quantitative easing. Tharenou expects the RBA to reduce the cash rate to just 0.25 per cent by May 2020.

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT

RBA chief ready to cut rates again

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Original article by Adam Creighton
The Australian – Page: 1 & 6 : 25-Sep-19

Reserve Bank of Australia governor Philip Lowe has signalled that the central bank is prepared to further reduce the cash rate if necessary. He has cited factors such as the downward trend in global interest rates and a ‘surprise’ slowdown in the domestic economy, which grew by just 1.4 per cent in the year to June. Lowe’s speech in regional New South Wales has heightened speculation that the RBA will reduce the cash rate to a new low of 0.75 per cent in October. George Tharenou of UBS expects the cash rate to fall to just 0.25 per cent by May.

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, ARMIDALE BUSINESS CHAMBER, UNITED STATES. FEDERAL RESERVE BOARD, EUROPEAN CENTRAL BANK, AUSTRALIAN LABOR PARTY

Westpac dividend under pressure

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Original article by James Eyers
The Australian Financial Review – Page: 17 : 23-Sep-19

There is growing speculation that Westpac could reduce its dividend payout in response to the Reserve Bank of New Zealand’s new capital requirements. Westpac has yet to determine the size of its final dividend for 2018-19, but Credit Suisse has forecast both a lower payout and a capital raising of at least $1.5bn when Westpac releases its full-year results in early November. The prospect of further official interest rate cuts in Australia is also weighing on the earnings of the nation’s banks.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, RESERVE BANK OF NEW ZEALAND, CREDIT SUISSE (AUSTRALIA) LIMITED, CITIGROUP PTY LTD, RESERVE BANK OF AUSTRALIA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, EVANS AND PARTNERS ASIA FUND – ASX EAF, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, PM CAPITAL LIMITED

ANZ tips 0.25pc cash rate by May

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Original article by Melissa Yeo, David Rogers
The Australian – Page: 21 : 6-Sep-19

The ANZ Bank’s head of Australian economics David Plank expects the Reserve Bank to reduce the cash rate by 0.25 per cent in October, and he says it is likely to ease monetary policy again in February and May 2020. Plank says factors such as the outlook for unemployment and global uncertainty will see official interest rates fall to a record low of 0.25 per cent. UBS economist George Tharenou also anticipates rate cuts in October and February, and he has flagged the potential for a third rate cut in March.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD

ANZ boss braces for slowdown

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Original article by Richard Gluyas, Glenda Korporaal, David Rogers, Andrew White
The Australian – Page: 17 & 25 : 4-Sep-19

Harvey Norman chairman Gerry Harvey expects the Reserve Bank of Australia to reduce the cash rate to at least 0.5 per cent, but he says this will do little to stimulate the economy. The RBA signalled on 3 September that official interest rates are likely to remain low for an extended period; ANZ Bank CEO Shayne Elliott says record low interest rates demonstrate that central banks are concerned about the global economic outlook. The RBA’s monthly board meeting coincided with the release of data showing that retail spending fell by 0.1 per cent in July, compared with economists’ expectations of an 0.2 per cent increase.

CORPORATES
RESERVE BANK OF AUSTRALIA, HARVEY NORMAN HOLDINGS LIMITED – ASX HVN, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIAN BUREAU OF STATISTICS, AUSTRALIAN TAXATION OFFICE, LATITUDE FINANCIAL SERVICES AUSTRALIA HOLDINGS PTY LTD

Reserve Bank flags QE to lift stagnant economy

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Original article by David Rogers
The Australian – Page: 24 : 28-Aug-19

The Reserve Bank of Australia’s deputy governor Guy Debelle says the nation has been a major beneficiary of the rules-based global trading system, and he has warned that the current threats to this system present a major risk to both the Australian and global economies. Debelle has also used an Economic Society speech to indicate that the RBA could be open to quantitative easing if the cash rate falls to 0.5 per cent. However, David Plank of the ANZ Bank says the RBA is unlikely to pursue such a course of action unless the cash rate falls to 0.25 per cent or lower.

CORPORATES
RESERVE BANK OF AUSTRALIA, ECONOMICS SOCIETY OF AUSTRALIA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

‘Political shocks turn into economic shocks’: RBA chief

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Original article by Michael Roddan
The Australian – Page: 1 & 4 : 26-Aug-19

Reserve Bank of Australia governor Philip Lowe has told the global monetary policy conference at Jackson Hole in Wyoming that the world is experiencing a period of major political shocks that are turning into economic shocks. Lowe also reiterated the need for governments to provide economic stimulus via infrastructure investment and structural reform, arguing that monetary policy alone is insufficient. Shadow treasurer Jim Chalmers says the federal government lacks a plan to turn around the Australian economy.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN LABOR PARTY, AUSTRALIA. DEPT OF THE TREASURY, BANK OF ENGLAND, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT

Cure for housing fix ‘worse than disease’: UBS

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Original article by Duncan Hughes
The Australian Financial Review – Page: 10 : 23-Aug-19

Investment bank UBS has warned that the Reserve Bank of Australia’s move towards extremely low interest rates risks reflating the residential property ‘bubble’. The ultra-low rates are also putting pressure on the dividend policies and margin levels of the nation’s large banks, while plans by the Australian Prudential Regulation Authority to reduce related-party exposure limits with regard to Tier 1 capital will put pressure on the banks’ capital.

CORPORATES
UBS HOLDINGS PTY LTD, RESERVE BANK OF AUSTRALIA, AUSTRALIA RADIATION LABORATORIES, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ