BANKS AND BANKING

Kickstart productivity or be kicked: RBA

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Original article by Patrick Commins, Giuseppe Tauriello
The Australian – Page: 1 & 4 : 17-May-23

The minutes from the Reserve Bank of Australia’s latest board meeting show that the decision to increase the cash rate by 25 basis points in May was a "finely balanced" one. Amongst other things, the board members noted that the nation’s declining productivity since the onset of the COVID-19 pandemic could make it difficult to bring inflation back under control. The RBA has warned that further interest rate increases are likely unless productivity is ‘kickstarted’. Analysts believe that quarterly wage price index data to be released on Wednesday could determine whether the RBA increases the cash rate in June.

CORPORATES
RESERVE BANK OF AUSTRALIA

Budget warning after RBA shock

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Original article by Michael Read, Phillip Coorey
The Australian Financial Review – Page: 1 & 6 : 3-May-23

Treasurer Jim Chalmers says the Reserve Bank of Australia’s decision to increase the cash rate to 3.85 per cent on Tuesday underlines the fact that inflation remains the primary challenge for the domestic economy. Chalmers adds that the latest rate increase highlights the need to ensure that the budget on 9 May does not add to Australia’s inflation outbreak. Amid calls for an increase in welfare payments, Chalmers has stresssed that the budget will include "responsible cost-of-living relief" that does not add to inflation. Meanwhile, RBA governor Philip Lowe has conceded that further interest rate rises may be needed in coming months in order to reduce inflation to the target range of 2-3 per cent; however, he says the RBA does not need to get inflation back to the target straight away, while it also cannot take too long to do so.

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

RBA to get the Lowe-down on jobs

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Original article by Patrick Commins
The Australian – Page: 1 & 4 : 21-Apr-23

The federal government will introduce legislation by the end of the year to amend the Reserve Bank Act after accepting all 51 recommendations of an independent review of the central bank. The RBA’s restructuring will result in responsibility for setting interest rates being transferred to a new monetary policy board, which will have six external members and continue to be chaired by the central bank’s governor. This board will meet eight times per year and it will hold a press conference after each meeting. The RBA will be required to give equal consideration to achieving full employment and controlling inflation in its future interest rate decisions. A separate governance board will assume responsibility for the day-to-day management of the RBA.

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RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY

Kelty praises experience of new RBA board members

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Original article by Ewin Hannan
The Australian – Page: 4 : 21-Apr-23

The federal government has appointed Iain Ross and Elana Rubin to the Reserve Bank’s existing board, ahead of the restructuring that will take effect by mid-2024. Ross is a former president of the Fair Work Commission, and Rubin has extensive experience as a company director. They have both been praised by former ACTU secretary Bill Kelty, who worked with them at the peak union body in the 1990s. Kelty says Ross and Rubin have significant knowledge of the labour market and they understand how the economy works. He adds that the RBA’s current board has made two "fundamental mistakes" – the decision to leave interest rates at an historic low for too long and telling people that rates would remain on hold until 2024.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. FAIR WORK COMMISSION, ACTU

RBA review ‘won’t change’ the path of interest rates

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Original article by Clancy Yeates, Millie Murio
The Age – Page: Online : 21-Apr-23

Treasurer Jim Chalmers has endorsed all 51 recommendations made by an independent review of the Reserve Bank. Economists have stated that the review’s recommendations are unlikely to result in different interest rate outcomes, nor do they consider that they will necessarily lead to improved long-term economic performance. Shane Oliver of AMP says the changes are unlikely to have much impact on households, adding that the RBA may end up making the same monetary policy decisions and most people will not notice much change. Paul Bloxham says the proposed changes will have limited impact on financial markets.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, AMP CAPITAL INVESTORS LIMITED, HSBC AUSTRALIA HOLDINGS PTY LTD

Twin RBA rate rises may be on horizon

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Original article by Alex Gluyas
The Australian Financial Review – Page: 27 : 19-Apr-23

Morgan Stanley believes that the strength of the domestic economy means that the Reserve Bank of Australia may increase the cash rate by 25 basis points in both August and September. Shares in retail and property-related stocks have risen in recent weeks amid speculation that the RBA’s monetary policy tightening cycle may have ended following the pause in April. However, Morgan Stanley cautions that the rebound may be premature, given that inflation remains high and the official unemployment rate is steady at 3.5 per cent.

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MORGAN STANLEY AUSTRALIA LIMITED, RESERVE BANK OF AUSTRALIA

RBA hits pause, for now

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 4 : 5-Apr-23

Reserve Bank of Australia governor Philip Lowe has emphasised that the interest rate pause on Tuesday does not necessarily mean that the cash rate has peaked. He says the decision to leave rates on hold at 3.6 per cent in April will give the RBA board more time to assess the state of the economy and the outlook. Lowe added that further tightening of monetary policy may be needed to restore inflation to the target range of 2-3 per cent. Financial markets have now priced in a 22 per cent chance of a rate rise in May, compared with 40 per cent prior to the monthly board meeting. Economists say that inflation data for the March quarter will be a key factor in the RBA’s interest rates decision in May.

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RESERVE BANK OF AUSTRALIA

RBA signals rates pause amid warning on woeful productivity

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Original article by Tom Dusevic
The Australian – Page: 1 & 4 : 22-Mar-23

The minutes from the Reserve Bank of Australia’s board meeting on 7 March show that it may be open to leaving the cash rate on hold in April. The minutes note that RBA board members agreed to reconsider the case for a pause at the April meeting, as this would provide it with additional time to reassess the outlook for the economy. The board also noted that a rate pause will be appropriate at some point in order to more fully assess the effect of the 10 consecutive interest rate increases to date. The minutes show that the RBA board is also concerned about Australia’s low level of productivity and its impact on inflation.

CORPORATES
RESERVE BANK OF AUSTRALIA

RBA ‘will do what’s necessary’, but end of rate rises in sight

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Original article by Patrick Commins
The Australian – Page: 1 & 2 : 8-Mar-23

Reserve Bank of Australia governor Philip Lowe adopted a more dovish tone on Tuesday following the latest 25 basis point increase in the cash rate, to 3.6 per cent. He said the RBA board expects that further tightening of monetary policy will be needed to ensure that inflation returns to the target range of 2-3 per cent. He added that the board is of the view that the current period of high inflation will be temporary. Lowe had stated after the RBA’s February board meeting that "further increases in interest rates will be needed over the months ahead". Josh Williamson of Citigroup says this change in tone suggests that the end of rate rises is in sight, and there could potentially be just one more in the current monetary policy tightening cycle. The cash rate is now at its highest level since May 2012.

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RESERVE BANK OF AUSTRALIA, CITIGROUP PTY LTD

Inflation: Act now or hurt like 1990s

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Original article by Geoff Chambers, Ewin Hannan, Joyce Moullakis
The Australian – Page: 1 & 4 : 7-Mar-23

The Reserve Bank of Australia is widely tipped to announce a 10th consecutive increase in the cash rate on Tuesday, and some economists believe that there is potential for up to four rate rises by June. Westpac’s chief economist Bill Evans says households face a tough time in coming months, and they must expect more rate rises. Evans warns that it is "now or never" if the RBA is to get inflation under control, and he contends that failing to do so would risk the prospect of interest rates approaching the levels that were seen in the 1990s. ACTU secretary Sally McManus has called for a pause in interest rate rises, arguing that Australians are "seriously hurting" and the rate rises to date have achieved the RBA’s goal of running down households’ savings.

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