BANKS AND BANKING

RBA admits it underpaid staff $1.15m

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Original article by Michael Read
The Australian Financial Review – Page: 4 : 15-Jun-23

PwC has completed its review of wage underpayments at the Reserve Bank of Australia. The review was commissioned after the central bank apologised to affected staff. PwC has found that 1,173 current and former RBA employees had been underpaid a total of $1.15 million, excluding interest. The RBA’s head of human resources Karlee Hughes has indicated that more than 20 per cent of affected staff had been underpaid by $150 or less; she added that the RBA takes paying its staff correctly very seriously, and it is "genuinely sorry" that the underpayment occured.

CORPORATES
RESERVE BANK OF AUSTRALIA, PRICEWATERHOUSECOOPERS AUSTRALIA (INTERNATIONAL) PTY LTD

Rates must stay high ‘into next year’: Carney

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Original article by John Kehoe
The Australian Financial Review – Page: 4 : 14-Jun-23

Former Bank of England governor Mark Carney has downplayed the prospect that official interest rates will be reduced in the near-term. Carney has warned that interest rates in Australia and abroad will need to remain high until well into 2024 in order to bring inflation under control. He adds that a "very robust" banking system means that Australia is much better placed to cope with higher interest rates than some countries. The Reserve Bank of Australia has flagged further interest rate rises in coming months as it seeks to restore inflation to the target range of 2-3 per cent.

CORPORATES
BANK OF ENGLAND, RESERVE BANK OF AUSTRALIA

Pain, blame and, at this rate, it’s not over

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Original article by Patrick Commins
The Australian – Page: 1 & 4 : 7-Jun-23

Reserve Bank of Australia governor Philip Lowe has defended the decision to increase the case rate by 25 basis points to 4.1 per cent on Tuesday. He says the 12th rate rise since May 2022 was necessary to provide greater confidence that inflation will return to the target range within a reasonable timeframe. He also cautioned that further rate rises may be needed, depending on the outlook for the economy and inflation. The Australian Chamber of Commerce & Industry contends that the recent 5.75 per cent increase in the minimum wage had forced the RBA’s hand. However, Treasurer Jim Chalmers rejects suggestions that the minimum wage increase and the federal government’s 9 May budget were to blame for the latest rate rise. The cash rate is now at its highest level since April 2012.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN CHAMBER OF COMMERCE AND INDUSTRY, AUSTRALIA. DEPT OF THE TREASURY

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.

CORPORATES
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.

CORPORATES
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.

CORPORATES
RESERVE BANK OF AUSTRALIA