BANKS AND BANKING

Nation stuck on grow slow: OECD

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Original article by Tom Dusevic
The Australian – Page: 1 & 4 : 20-Sep-23

The OECD still expects Australia to record GDP growth of 1.8 per cent in 2023, in line with its previous forecast. However, GDP growth is expected to be just 1.3 per cent in 2024. The OECD has also forecast that Australia’s headline inflation rate will fall to 3.2 per cent in 2024, down from 5.5 per cent in 2023. However, the Reserve Bank of Australia’s preferred measure of core inflation is forecast to rise to 5.9 per cent in 2023 before falling to 3.3 per cent next year. Meanwhile, the minutes from the RBA’s monthly board meeting shows that board members considered lifting the cash rate to 4.35 per cent in September, due to concerns about inflation

CORPORATES
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, RESERVE BANK OF AUSTRALIA

Top economists see end to rate hikes, predict house price recovery

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Original article by Millie Muroi
The Age – Page: Online : 13-Sep-23

The Commonwealth Bank of Australia’s chief economist Stephen Halmarick says a falling inflation rate means that official interest rates have now most likely peaked. He expects consumer spending to begin to decline by the end of 2023, prompting the Reserve Bank to start easing monetary policy in 2024. Halmarick also forecasts that house prices will rise by seven per cent in 2023 and a further five per cent in 2024, citing factors such as rising migration levels and housing supply constraints. Besa Deda from Westpac also suggests that interest rates may have peaked, and she expects the cash rate to begin falling in the second half of 2024.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, RESERVE BANK OF AUSTRALIA

RBA to keep rates on hold as inflation stalls

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Original article by Patrick Commins
The Australian – Page: 2 : 6-Sep-23

Philip Lowe has used his final statement as Reserve Bank of Australia governor to contend that the series of interest rate rises since May 2022 are working to establish a "more sustainable balance between supply and demand in the economy". He adds that the decision on Tuesday to pause official rates at 4.1 per cent for a third successive month will give the RBA board more time to assess the economic outlook and the impact of the interest rate rises to date. Lowe emphasised that bringing inflation under control is still the board’s priority. JP Morgan expects the RBA to increase the cash rate one more time, in November. Michele Bullock will formally succeed Lowe on 18 September.

CORPORATES
RESERVE BANK OF AUSTRALIA,JP MORGAN AUSTRALIA LIMITED

RBA warns job market may be about to sour

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Original article by Michael Read, Tess Bennett
The Australian Financial Review – Page: 4 : 16-Aug-23

The minutes of the Reserve Bank of Australia’s board meeting for August show that it considered increasing the cash rate to 4.35 per cent. However, indications that the jobs market may at a "turning point" are among the reasons why the board opted for a second successive monthly pause. The RBA cited factors such as a small rise in the official underemployment rate, a fall in hiring intentions and improved labour availability as signs that the jobs boom may be coming to an end. Meanwhile, economists say weaker-than-expected wages growth will strengthen the case for the cash rate to remain on hold for an extended period.

CORPORATES
RESERVE BANK OF AUSTRALIA

Lowe: we are on way to taming inflation

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Original article by Patrick Commins
The Australian – Page: 1 & 4 : 2-Aug-23

Treasurer Jim Chalmers says the Reserve Bank of Australia’s decision to leave the cash rate unchanged at 4.1 per cent on Tuesday will be a "welcome reprieve" for people who are "doing it tough". He adds that while inflation is falling, it is still too high. RBA governor Philip Lowe has also acknowledged that consumer price growth remains too high, but says the recent data is consistent with inflation returning to the target range of 2-3 per cent over time. Lowe adds that a second successive pause will give the RBA more time to assess the impact of the rate rises to date, as well as the economic outlook.

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

Rate hikes may cost even more jobs: RBA

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Original article by Patrick Commins
The Australian – Page: 2 : 19-Jul-23

The minutes of the Reserve Bank of Australia’s board meeting for July show that it considered a 25 basis point increase in the cash rate. The board also discussed the possibility that growing pressure on households’ budgets could result in consumption slowing more sharply than the current forecasts suggest. This would in turn result in slower demand for labour, while the unemployment rate would most likely rise beyond the rate required to ensure that inflation returns to the target range of 2-3 in a timely manner. National Australia Bank’s senior economist Adam Boynton expects interest rates to remain on hold, although he says a rate rise in August is still a possibility.

CORPORATES
RESERVE BANK OF AUSTRALIA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Chalmers won’t back the unions on jobless target

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Original article by Greg Brown
The Australian – Page: 4 : 17-Jul-23

Treasurer Jim Chalmers says he will not ‘pre-empt’ the monetary policy decisions that incoming Reserve Bank of Australia governor Michele Bullock might recommend to its board. Chalmers adds that it "remains to be seen" as to whether inflation can be brought under control with higher levels of employment, and he says inflation is the main challenge facing the domestic economy. The ACTU has called for a "reset" of the RBA’s full employment target in the wake of Bullock’s appointment, while Australian Workers Union secretary Paul Farrow said the RBA should redefine full employment as being "understood as zero involuntary unemployment". Bullock had suggested in June that the unemployment rate will have to rise to 4.5 per cent to restore inflation to the target range of 2-3 per cent.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, RESERVE BANK OF AUSTRALIA, ACTU, AUSTRALIAN WORKERS’ UNION-FEDERATION OF INDUSTRIAL, MANUFACTURING AND ENGINEERING EMPLOYEES

1.4m borrowers at risk of repayment stress

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Original article by James Eyers
The Australian Financial Review – Page: 16 : 5-Jul-23

The Reserve Bank of Australia has signalled that further interest rate rises may be necessary in order to return inflation to its target range, after leaving the cash rate unchanged at 4.1 per cent on Tuesday. Households will face further financial pressure if there are more rate rises. Home loan borrowers will be particularly vulnerable, with research from Roy Morgan showing that 1.43 million mortgage borrowers are now at risk of mortgage stress; this is an increase of 627,000 in the last year. Roy Morgan estimates that an additional 51,000 borrowers would be at risk of mortgage stress if the cash rate is increased by another 25 basis points. A second rate rise of this size would put another 94,000 borrowers at risk of mortgage stress.

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RESERVE BANK OF AUSTRALIA, ROY MORGAN LIMITED

RBA set to stay tighter for longer

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Original article by Joanne Tran
The Australian Financial Review – Page: 1 & 22 : 3-Jul-23

The consensus of economists polled by the Australian Financial Review is that official interest rates will peak at 4.6 per cent in August. Judo Bank economist Warren Hogan estimates that there is a 35 per cent chance that the cash rate will rise above five per cent, citing factors such as ‘sticky’ inflation. However, Su-Lin Ong of RBC Capital Markets expects the cash rate to peak at 4.35 per cent in July. Meanwhile, most of the 27 economists who participated in the quarterly survey anticipate that the Reserve Bank will not begin easing monetary policy before May 2024, although Carlos Cacho of Jarden expects the first rate cut to occur in November 2024.

CORPORATES
JUDO BANK PTY LTD, RBC CAPITAL MARKETS, RESERVE BANK OF AUSTRALIA, JARDEN AND COMPANY

‘Unemployment is too low’: RBA deputy stirs up union anger

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Original article by Patrick Commins, Ewin Hannan
The Australian – Page: 1 & 4 : 21-Jun-23

The Reserve Bank of Australia’s deputy governor Michele Bullock says the nation’s unemployment rate will need to rise to 4.5 per cent over the next year if inflation is to be progressively restored to the target range of 2-3 per cent. Bullock adds that failure to bring inflation under control would most likely result in a "deep and long-lasting recession". Her comments have been criticised by union leaders, with CFMEU national secretary Zach Smith saying it is shameful for a top central banker to state that unemployment needs to rise. He contends that tens of thousands of livelihoods would be at risk from such an "irresponsible economic approach", and adds that corporate profits are the main driver of the high inflation rate.

CORPORATES
RESERVE BANK OF AUSTRALIA, CONSTRUCTION, FORESTRY, MARITIME, MINING AND ENERGY UNION OF AUSTRALIA