BANKS AND BANKING

Bullock’s red flag on inflation

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Original article by Patrick Commins
The Australian – Page: 1 & 5 : 8-May-24

Reserve Bank of Australia governor Michele Bullock says she is "alert and vigilant" to the risk of inflation staying too high for too long. The RBA left the cash rate on hold at 4.35 per cent on Tuesday, and Bullock says the RBA board believes that it is at the right level to return inflation to the target range of 2-3 per cent in 2025. However, Bullock adds that doing so is likely to be a bumpy ride, while she has flagged the possibility of further interest rate increases if services inflation remains above the central bank’s target range. Meanwhile, Bullock has emphasised the need for Treasurer Jim Chalmers to ensure that the budget on 14 May is not inflationary.

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

RBA’s next move will still be a cut: investors

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Original article by Cecile Lefort
The Australian Financial Review – Page: 29 : 30-Apr-24

The US Federal Reserve is now widely tipped to deliver its first interest rate cut in December, after the latest inflation data dampened expectations of a rate cut in June. Meanwhile, bond traders have now priced in a 50 per cent chance that the Reserve Bank of Australia will increase the cash rate to 4.6 per cent by September. Both central banks are expected to leave interest rates unchanged at their upcoming board meetings. Kapstream Capital portfolio manager Kris Bernie still expects the RBA to reduce the cash rate, although he says this is now likely to be delayed until 2025.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF AUSTRALIA, KAPSTREAM CAPITAL PTY LTD

RBA to increase cash rate to 5.1pc, says top forecaster

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 4 : 26-Apr-24

The consensus of economists is that the Reserve Bank of Australia will upgrade its near-term inflation forecast in May, following the release of the latest CPI data. A stronger-than-expected headline inflation rate of one per cent for the March quarter – and 3.6 per cent in the year to March – has also prompted economists to forecast that the RBA will delay its first official interest rate cut. However, while most economists expect the RBA’s next move will be a rate cut, Judo Bank’s chief economic adviser Warren Hogan has forecast that it will increase the cash rate three times in 2024, from 4.35 per cent at present to 5.1 per cent. He had previously anticipated that the first rate cut would occur in early 2025.

CORPORATES
RESERVE BANK OF AUSTRALIA, JUDO BANK PTY LTD, JUDO CAPITAL HOLDINGS LIMITED – ASX JDO

Fears interest rates could be hiked in 2024

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Original article by Sarah Sharples
Herald Sun – Page: Online : 24-Apr-24

Australia’s employment and inflation outlook has prompted speculation that the Reserve Bank could increase rather than reduce the cash rate in 2024. Another official interest rate rise would put further pressure on mortgage holders. Data from Roy Morgan shows that 1.53 million mortgage holders were at risk of mortgage stress in March; CEO Michele Levine says Roy Morgan’s modelling shows that this would rise to 1.57 million mortgage holders if the central bank were to increase the cash rate by 0.25 per cent in both May and June, to 4.85 per cent.

CORPORATES
RESERVE BANK OF AUSTRALIA, ROY MORGAN LIMITED

‘Can’t rule out a further rate rise’: economists survey reveals caution

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Original article by Cecile Lefort
The Australian Financial Review – Page: 29 : 23-Apr-24

The consensus of economists polled by the Australian Financial Review is that the Reserve Bank will reduce the cash rate in November. However, financial market pricing suggests that the central bank will leave official interest rates unchanged for the rest of the year. Meanwhile, Ben Picton from Rabobank says another interest rate increase remains a possibility if inflation begins to accelerate. CPI data for the March quarter will be released on Wednesday.

CORPORATES
RESERVE BANK OF AUSTRALIA, RABOBANK AUSTRALIA LIMITED

Reserve Bank could end up cutting rates before the Fed

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Original article by Cecile Lefort
The Australian Financial Review – Page: 28 : 16-Apr-24

The US Federal Reserve has traditionally been the first central bank to cut interest rates when a monetary policy easing cycle begins. However, other countries have experienced a sharper slowdown in economic growth and inflation than the US; this has heightened expectations that the Federal Reserve will leave the cash rate on hold for longer than forecast. Some economists now expect the Fed to delay a rate cut until December, while there has also been speculation about another rate rise. Meanwhile, AMP says the Reserve Bank of Australia could potentially reduce official interest rates in June.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF AUSTRALIA, AMP LIMITED – ASX AMP

Rate cut hopes dashed by US data

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Original article by Cecile Lefort
The Australian Financial Review – Page: 23 : 12-Apr-24

Financial markets have now priced in a 20 per cent chance that the US Federal Reserve will reduce the cash rate in June, compared with 58 per cent prior to the release of the latest inflation data. The figures showed that the inflation rate remains well above the central bank’s target of two per cent; core inflation rose by 0.4 per cent in March and 3.8 per cent in the year to March. Financial markets now expect just one rate cut in 2024. The US inflation data has also prompted Australian investors to scale back their expectations regarding the timing of monetary policy easing by the Reserve Bank.

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

Bullock backs Chalmers in RBA stoush with Coalition

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Original article by Michael Read
The Australian Financial Review – Page: 4 : 20-Mar-24

Treasurer Jim Chalmers wants the Coalition’s support for legislation to overhaul the Reserve Bank of Australia, as he does not want to negotiate with the Greens. The Coalition is concerned that Chalmers wants the RBA existing board members to be appointed to its new governance board so he can "stack" the interest rates-setting board with people who are aligned with Labor. RBA governor Michelle Bullock says she would like "continuity with respect to both boards", but adds that she has no firm views on just how many current board members should serve on each of the new boards.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY

RBA keeps rate rise in reserve

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 8 : 20-Mar-24

The Reserve Bank of Australia’s decision to leave the cash rate unchanged at 4.35 per cent on Tuesday had been widely expected. However, the RBA appears to have adopted a more neutral monetary policy stance in the statement it released after the two-day board meeting. It stated that the board is "not ruling anything in or out" with regard to the next interest rate move; in contrast, the RBA stated in February that a further increase in interest rates "cannot be ruled out". Financial markets have now fully priced in a 25 basis point reduction in the cash rate in September, as well as a strong chance of another rate cut in December.

CORPORATES
RESERVE BANK OF AUSTRALIA

Borrowers on slow march to mortgage cliff amid rollover

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Original article by Patrick Commins
The Australian – Page: 4 : 19-Mar-24

The Commonwealth Bank’s head of Australian economics Gareth Aird notes that the worst fears about the so-called ‘mortgage cliff’ have not eventuated. However, he adds that the shift from fixed to variable-rate home loans has had an impact on many households’ spending. Meanwhile, it is estimated that more than 250,000 households will transition to variable-rate home loans over the next 18 months; their mortgage repayments are set to rise sharply, even if the Reserve Bank does not increase the cash rate again.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESERVE BANK OF AUSTRALIA