BANKS AND BANKING

Weak housing data boosts odds of rate cut

roymorgansocial Leave a comment

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

roymorgansocial Leave a comment

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

roymorgansocial Leave a comment

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

roymorgansocial Leave a comment

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

RBA sets jobless test for rate cut

roymorgansocial Leave a comment

Original article by Vesna Poljak, Matthew Cranston
The Australian Financial Review – Page: 1 & 4 : 8-May-19

The Reserve Bank has downgraded its 2019 growth forecast for the Australian economy from three per cent to around 2.75 per cent. The central bank indicated on 7 May that a "further improvement" in the labour market will be necessary to lift inflation to its target range. It has also flagged the prospect of an interest rate cut if the employment rate does not fall below five per cent. Michael Blythe of the Commonwealth Bank says the central bank will almost certainly reduce the cash rate if there is even a modest rise in unemployment.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, GOLDMAN SACHS AUSTRALIA PTY LTD, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY

RBA pressures banks to cut rates

roymorgansocial Leave a comment

Original article by Richard Gluyas
The Australian – Page: 19 & 28 : 8-May-19

Australian banks’ net interest margin fell by 11 basis points in the first half of 2018-19, compared with the previous corresponding period. Jarrod Martin of Credit Suisse says ongoing margin pressure means the banks are unlikely to reduce their variable mortgage interest rates independently of the Reserve Bank. Victor German of Macquarie Group adds if the Reserve Bank had reduced the cash rate by 25 basis points on 7 May, the banks would probably have reduced their variable rates by around 20 basis points.

CORPORATES
CREDIT SUISSE (AUSTRALIA) LIMITED, MACQUARIE GROUP LIMITED – ASX MQG, RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC

RBA set to cut, Macquarie predicts

roymorgansocial Leave a comment

Original article by Sarah Turner
The Australian Financial Review – Page: 29 : 3-May-19

Inflation remains well below the Reserve Bank’s target range of 2-3 per cent, and Ric Deverell of Macquarie Group notes that it is continuing to trend lower. He says the inflation outlook is the key factor that will prompt the Reserve Bank to reduce official interest rates by 25 basis points on 7 May. Deverell adds that a rate cut will have more impact while the unemployment rate is low rather than if the central bank waits until it rises.

CORPORATES
RESERVE BANK OF AUSTRALIA, MACQUARIE GROUP LIMITED – ASX MQG

Keep RBA’s rate trigger away from politics

roymorgansocial Leave a comment

Original article by Perry Williams, Joyce Moullakis
The Australian – Page: 17 & 22 : 2-May-19

APA Group’s Mick McCormack has weighed into the debate on the outlook for monetary policy, saying the Reserve Bank should not reduce the cash rate in May. He argues that a rate cut during an election campaign would "inevitably" become politicised. ANZ Bank CEO Shayne Elliott also believes that an interest rate cut is needed in May, and a number of economists have forecast a rate cut. However, financial markets have priced in a 44 per cent chance of a rate cut at the central bank’s monthly board meeting.

CORPORATES
APA GROUP – ASX APA, RESERVE BANK OF AUSTRALIA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, JP MORGAN AUSTRALIA LIMITED, RBC CAPITAL MARKETS, MACQUARIE GROUP LIMITED – ASX MQG, UBS HOLDINGS PTY LTD, MORGANS FINANCIAL LIMITED, TD SECURITIES, CAPITAL ECONOMICS LIMITED, CITIGROUP PTY LTD, NOMURA AUSTRALIA LIMITED

Politicians silent on inflation target change

roymorgansocial Leave a comment

Original article by Matthew Cranston
The Australian Financial Review – Page: 4 : 30-Apr-19

The need for the Reserve Bank’s inflation target continues to attract scrutiny, given that inflation remains well below its target range of 2-3 per cent. Warren Hogan and David Bassanesse are among the economists who believe that the central bank should revise its inflation target, although Westpac’s Bill Evans argues that doing so would have an impact on inflation expectations. Treasurer Josh Frydenberg and shadow treasurer Chris Bowen have declined to comment on the prospect of government intervention regarding the inflation target after the federal election.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, UNIVERSITY OF TECHNOLOGY, SYDNEY, BETASHARES CAPITAL LIMITED, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, AMP CAPITAL INVESTORS LIMITED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

The votes are in: Macquarie joins calls for an early cut in interest rates

roymorgansocial Leave a comment

Original article by Perry Williams, David Rogers
The Australian – Page: 17 & 27 : 30-Apr-19

The chances of a reduction in the cash rate in May is around 50 per cent, according to financial market pricing. However, a growing number of economists expect the Reserve Bank of Australia to ease monetary policy in May. Macquarie Group is the latest to forecast a rate cut in May, and chief economist Ric Deverell says the RBA is unlikely to be unduly concerned about reducing the cash rate during an election campaign. Macquarie says the central bank might also reduce its GDP growth and inflation forecasts at the monthly board meeting.

CORPORATES
RESERVE BANK OF AUSTRALIA, MACQUARIE GROUP LIMITED – ASX MQG, JP MORGAN AUSTRALIA LIMITED, ROYAL BANK OF CANADA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, UBS HOLDINGS PTY LTD, CAPITAL ECONOMICS LIMITED, CITIGROUP PTY LTD, TD SECURITIES, NOMURA AUSTRALIA LIMITED, WESTPAC BANKING CORPORATION – ASX WBC