Business wary of RBA rate cut

Original article by Patrick Durkin, Matthew Cranston
The Australian Financial Review – Page: 1 & 6 : 3-Jun-19

Business leader Tony Shepherd has urged the Reserve Bank to leave official interest rates unchanged in June, arguing that it should wait for the impact of the federal election to fully flow through to the economy. Coca-Cola Amatil CEO Alison Watkins warns that a rate cut in June would leave the central bank with limited "firepower" in the event of a downturn in the economy. However, MYOB Group CEO Tim Reed notes that small businesses generally benefit from interest rate cuts.

CORPORATES
RESERVE BANK OF AUSTRALIA, COCA-COLA AMATIL LIMITED – ASX CCL, MYOB GROUP LIMITED, HSBC AUSTRALIA HOLDINGS PTY LTD, ENERGYAUSTRALIA PTY LTD, VIRGIN AUSTRALIA HOLDINGS LIMITED – ASX VAH, GRAINCORP LIMITED – ASX GNC, QANTAS AIRWAYS LIMITED – ASX QAN, GREATER WESTERN SYDNEY FOOTBALL CLUB, SYDNEY CRICKET GROUND, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, UNIVERSITY OF TECHNOLOGY, SYDNEY, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIAN LABOR PARTY

Quantitative easing on cards as economy falters

Original article by James Glynn
The Australian – Page: 27 : 30-May-19

The 10-year Australian government bond yield fell to a record low of 1.487 per cent in recent days, widening the gap with US Treasuries to 0.75 per cent, while the Australian dollar is close to a 10-year low. David Plank of the ANZ Bank says there has been some speculation in financial markets that the Reserve Bank could pursue quantitative easing in addition to interest rate cuts. However, Stephen Halmarick of the Commonwealth Bank says reducing the cash rate to one per cent and government policies such as income tax cuts should provide sufficient economic stimulus to rule out the need for quantitative easing.

CORPORATES
RESERVE BANK OF AUSTRALIAAUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZCOMMONWEALTH BANK OF AUSTRALIA – ASX CBAJP MORGAN AUSTRALIA LIMITEDUNITED STATES. FEDERAL RESERVE BOARD

Banks bluffing on NZ lending threats: former PM

Original article by James Eyers
The Australian Financial Review – Page: 17 & 20 : 24-May-19

Former New Zealand prime minister Bill English has concerns about the Reserve Bank of NZ’s plans to require the local subsidiaries of Australia’s big four banks to increase their capital levels. S&P Global Ratings has estimated that the banks would need to raise an additional $8.1 billion, given that Australia’s four major banks have an 86 per cent share of the NZ lending market. English is worried that the move will make the banks more complacent about risk management, although he doubts that they will go ahead with threats to reduce lending in New Zealand.

CORPORATES
RESERVE BANK OF NEW ZEALAND, S&P GLOBAL RATINGS, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, STOCKBROKERS AND FINANCIAL ADVISERS ASSOCIATION LIMITED, AUSTRALIAN LABOR PARTY

RBA cash rate below 1pc tipped

Original article by Matthew Cranston
The Australian Financial Review – Page: 8 : 23-May-19

Financial markets have priced in a 25 per cent chance that the Reserve Bank of Australia will reduce the cash rate three times by the end of 2019. However, economists are sceptical as to whether a cash rate of one per cent or less would provide sufficient economic stimulus to meet the central bank’s revised growth forecast of 2.75 per cent. Commonwealth Bank economists say that an interest rate cut in June would help to stabilise house prices and stimulate the economy in the second half of the year.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, JP MORGAN AUSTRALIA LIMITED, IFM INVESTORS PTY LTD, ERNST AND YOUNG, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Economy needs rate cuts: Lowe

Original article by David Rogers
The Australian – Page: 17 & 24 : 22-May-19

Financial markets have priced in a 92 per cent chance that the Reserve Bank of Australia will reduce the cash rate in June, in response to comments made by governor Philip Lowe. He used an Economics Society speech on 21 May to argue that two interest rate cuts are needed to prevent an increase in unemployment and to lift inflation to the central bank’s target range. Financial markets also expect a second interest rate cut by November, and Westpac economist Bill Evans forecasts that the RBA will do so in August.

CORPORATES
RESERVE BANK OF AUSTRALIA, ECONOMICS SOCIETY OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, apra use AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, STANDARD AND POOR’S ASX 200 INDEX, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AMP CAPITAL INVESTORS LIMITED, JP MORGAN AUSTRALIA LIMITED, NOMURA AUSTRALIA LIMITED, BARCLAYS BANK PLC, RBC CAPITAL MARKETS

Rise in jobless lifts chance of rate cut

Original article by David Rogers
The Australian – Page: 32 : 17-May-19

Financial markets have priced in a 64 per cent chance that the Reserve Bank of Australia will reduce the cash rate in June, after official data showed that the unemployment rate rose from five per cent to 5.2 per cent in April. However, George Tharenou of UBS still expects the central bank to leave interest rates on hold until July, preferring to wait for the next set of labour market data before taking action. Ben Jarman of JP Morgan forecasts a rate cut in August.

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, JP MORGAN AUSTRALIA LIMITED, CITIGROUP PTY LTD, AUSTRALIAN BUREAU OF STATISTICS, STANDARD AND POOR’S ASX 200 INDEX

Weak housing data boosts odds of rate cut

Original article by Sarah Turner
The Australian Financial Review – Page: 33 : 14-May-19

Financial markets have priced in a 30 per cent chance that the Reserve Bank of Australia will reduce the cash rate in June, following the release of the latest housing finance data. The figures show that lending fell by 3.2 per cent in March, and by 18.4 per cent year-on-year. Financial markets have now priced in a 98 per cent chance of a rate cut in August. Meanwhile, UBS expects interest rate cuts in July and August,

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, AUSTRALIAN BUREAU OF STATISTICS, HSBC AUSTRALIA HOLDINGS PTY LTD, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT

Odds of post-election rate cut mispriced, says Ellerston

Original article by Jonathan Shapiro
The Australian Financial Review – Page: 17 & 31 : 10-May-19

Financial market traders have priced in a 20 per cent chance of an official interest rate cut in June, after the Reserve Bank of Australia left the cash rate on hold in May. Brett Gillespie of Ellerston Capital argues that the central bank would have wanted to avoid adjusting monetary policy during an election campaign, as it could potentially have been accused of influencing the outcome of the election. He expects a rate cut in June, stating that the RBA’s mandate requires it to do so as soon as possible.

CORPORATES
RESERVE BANK OF AUSTRALIA, ELLERSTON CAPITAL PTY LTD, TUDOR INVESTMENT CORPORATION, GOLDMAN SACHS AUSTRALIA PTY LTD

Inflation target review makes sense: Don Brash

Original article by Matthew Cranston
The Australian Financial Review – Page: 5 : 10-May-19

The Reserve Bank of Australia should review its inflation target range of 2-3 per cent, according to former Reserve Bank of New Zealand governor Don Brash. He adds that the target band may need to be widened rather than reduced. Australia’s inflation rate remains well below the target band, but former RBA governor Bernie Fraser does not believe that a review is necessary. Brash headed the RBNZ when it introduced inflation targeting in 1990; its inflation target is currently 1-3 per cent.

CORPORATES
RESERVE BANK OF AUSTRALIA, RESERVE BANK OF NEW ZEALAND, AUSTRALIA. DEPT OF THE TREASURY

Why New Zealand moved and the RBA held

Original article by David Rogers
The Australian – Page: 27 : 9-May-19

The Reserve Bank of New Zealand’s decision to reduce the cash rate for the first time since 2016 had been widely expected. The central bank attributed its move to the outlook for global economic outlook and domestic factors such as the outlook for employment and inflation. Meanwhile, market pricing suggests that the Reserve Bank of Australia will leave the cash rate on hold until at least September, while a second rate cut could be delayed until May 2020.

CORPORATES
RESERVE BANK OF NEW ZEALAND, RESERVE BANK OF AUSTRALIA