BANKS AND BANKING

What would it take to get the Reserve Bank moving in 2018?

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Original article by Patrick Commins
The Australian Financial Review – Page: 27 : 8-Mar-18

There is speculation that the Reserve Bank may increase the cash rate in November 2018, although economists generally expect rates to remain on hold until 2019. Regardless, a rate rise in the near-term is unlikely, and the central bank seems certain to break its record for the longest consecutive run of board meetings with no change in monetary policy. Meanwhile, Chris Nicol and Daniel Blake of Morgan Stanley say that wages growth would be the key factor that would prompt the Reserve Bank to increase the cash rate in 2018.

CORPORATES
RESERVE BANK OF AUSTRALIA, MORGAN STANLEY AUSTRALIA LIMITED, CITIGROUP PTY LTD, TD SECURITIES, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

A patient RBA risks playing catch-up later

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Original article by Patrick Commins
The Australian Financial Review – Page: 21 : 19-Feb-18

Westpac estimates that there is a 60 per cent chance that the Reserve Bank will increase official interest rates in 2018. There had been general consensus in financial markets early in 2018 that a rate rise before the end of the year was almost certain, but expectations have been dampened by factors such as market volatility and the latest inflation data. However, other major central banks are tightening monetary policy, prompting some experts to warn that the Reserve Bank may need to increase rates more aggressively at some stage.

CORPORATES
RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD, BANK OF AMERICA AUSTRALIA LIMITED, MERRILL LYNCH (AUSTRALIA) PTY LTD, CITIGROUP PTY LTD

Rate rise likely as CPI starts to edge up

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Original article by Harriet Torry
The Australian – Page: 23 : 16-Feb-18

New figures show that the US has recorded its biggest monthly increase in inflation since March 2005. The larger-than-expected increase in January has increased the likelihood that the Federal Reserve will lift interest rates in March; the central bank considers an inflation rate of two per cent to be an indication of a healthy economy, but it does not want inflation to get much higher than that. Investors took the January inflation figures in their stride, with the Dow Jones closing up around one per cent. Originally published in "The Wall Street Journal".

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, WELLS FARGO AND COMPANY, PPG INDUSTRIES, WALT DISNEY COMPANY, AMAZON.COM INCORPORATED, SHERWIN-WILLIAMS

Low inflation, low unemployment, and Lowe restraint

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Original article by David Uren
The Australian – Page: 1 & 6 : 9-Feb-18

Reserve Bank governor Philip Lowe has indicated that an interest rate rise is now more likely than a rate cut. However, he says the central bank is unlikely to tighten monetary policy until inflation rises around the mid-point of its target range of 2-3 per cent and there is a further reduction in the unemployment rate. He has stressed that the Reserve Bank does not need to adjust monetary policy in line with other central banks. Lowe also says the Reserve Bank does not expect its inflation forecasts to be unduly affected by the recent sharemarket volatility.

CORPORATES
RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD

Why the RBA will hike interest rates

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Original article by Karen Maley
The Australian Financial Review – Page: 30 : 6-Feb-18

Ellerston Capital’s Tim Toohey expects the Reserve Bank to increase official interest rates by 125 basis points over the next three years, beginning in the second half of 2018. He says the prospect of higher interest rates will have relatively little impact on consumers, despite rising household debt, arguing that the net worth of Australian households has risen strongly over the last decade. Meanwhile, he attributes a slump in retail spending in the September 2017 quarter to the Federal Government’s changes in the rules on voluntary superannuation contributions rather than negative consumer sentiment.

CORPORATES
ELLERSTON CAPITAL PTY LTD, RESERVE BANK OF AUSTRALIA

US inflation stirs global rate rise bets

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Original article by John Kehoe
The Australian Financial Review – Page: 1 & 27 : 15-Jan-18

Thierry Albert Wizman of Macquarie Group notes that the Reserve Bank of Australia is the only major central bank among developed countries that has not flagged a rise in official interest rates. The Bank of Canada is widely tipped to tighten monetary policy again in mid-January, while the general consensus of economists is that US interest rates will rise in March. Meanwhile, New York Federal Reserve president William Dudley recently warned that factors such as the low unemployment rate in the US and the Trump administration’s tax cuts could potentially see the US economy "overheat".

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD, FEDERAL RESERVE BANK OF NEW YORK, BANK OF CANADA, EUROPEAN CENTRAL BANK, BANK OF JAPAN, FIS GROUP, BANK OF AMERICA CORPORATION, CAPITAL ECONOMICS LIMITED, LEHMAN BROTHERS INCORPORATED, RBC CAPITAL MARKETS, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT

Investors expect US rate hike path to slow

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Original article by Karen Maley
The Australian Financial Review – Page: 24 : 15-Dec-17

Financial markets had generally expected the US Federal Reserve to increase interest rates in December, but Federal Open Market Committee members Charles Evans and Neel Kashkari voted against tightening monetary policy. The latter had also voted against the previous rate increases in March and June, although Evans had been expected to vote in favour of a rate rise. Meanwhile, the Federal Reserve still expects inflation to remain below its target of two per cent until 2019, while it has reiterated its expectations of three rate rises in 2018.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. FEDERAL OPEN MARKET COMMITTEE, FEDERAL RESERVE BANK OF MINNEAPOLIS

Jobs surge supports RBA’s growth forecasts

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Original article by David Rogers
The Australian – Page: 27 : 15-Dec-17

The latest jobs data may strengthen the case for the Reserve Bank of Australia to begin lifting the cash rate in late 2018. Some 62,000 jobs were created in November, and 383,000 in the last year, while the unemployment rate was steady at 5.4 per cent. The Australian Bureau of Statistics data also supports the central bank’s view that economic growth will be above its trend rate in 2018. However, Tom Kennedy of JP Morgan says the RBA is likely to keep interest rates on hold while the unemployment rate remains at its current level, while George Tharenou of UBS does not expect a rate rise until 2019.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, RESERVE BANK OF AUSTRALIA, JP MORGAN AUSTRALIA LIMITED, UBS HOLDINGS PTY LTD, AMP CAPITAL INVESTORS LIMITED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

House prices to fall further: economists

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Original article by Su-Lin Tan
The Australian Financial Review – Page: 6 : 5-Dec-17

UBS says the Reserve Bank of Australia is unlikely to reduce official interest rates in the near-term, despite data showing that house prices in Sydney fell by 1.3 per cent in the three months to November. UBS notes that in the past the RBA has frequently reduced the cash rate in response to a sharp fall in house prices. The firm adds that a further downturn in house prices is likely. Meanwhile, LF Economics expects the royal commission into the banking sector to have a significant impact on house prices.

CORPORATES
UBS HOLDINGS PTY LTD, RESERVE BANK OF AUSTRALIA, LF ECONOMICS, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

OECD urges RBA to start lifting rates

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Original article by Jacob Greber
The Australian Financial Review – Page: 3 : 29-Nov-17

The OECD expects the Reserve Bank of Australia to lift interest rates in the second half of 2018, even if the inflation rate remains within the RBA’s target of two to three per cent. The OECD argues that rates will need to be increased in order to address concerns about Australia’s debt levels and to dampen down its housing market. The OECD has also called on the federal government to stick to its goal of improving the budget.

CORPORATES
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD