Rate cut odds sink with jobless fall

Original article by Adam Creighton
The Australian – Page: 2 : 24-Jan-20

Official data shows that Australia’s unemployment rate fell to 5.1 per cent in December, its lowest level since April. The economy shed 300 full-time jobs, although this was offset by the creation of 29,200 part-time jobs. The underemployment rate was steady at 8.3 per cent; the Australian Bureau of Statistics’ chief economist Bruce Hockman notes that underemployment has remained unchanged over the last year. Financial markets have responded to the latest jobs data by pricing in a 25 per cent chance that the Reserve Bank will reduce the cash rate in February.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, RESERVE BANK OF AUSTRALIA

Rate cuts not working says CBA economist

Original article by Sarah Turner
The Australian Financial Review – Page: 27 : 22-Jan-20

National Australia Bank’s chief economist Alan Oster says the Reserve Bank needs to reduce official interest rates twice in 2020 in order to stimulate the economy. He expects the first rate cut to be in February. The Commonwealth Bank’s chief economist Michael Blythe also anticipates a rate cut in February, although he opposes such a move. Blythe contends that the three rate cuts in 2019 have not been effective, and they have resulted in outcomes such as a decline in consumer confidence.

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

RBA warns on buy now, pay later dangers

Original article by Gerard Cockburn
The Australian – Page: 14 : 16-Jan-20

Documents released under Freedom of Information laws shows that the Reserve Bank of Australia had expressed concern about the growth of ‘buy now, pay later’ platforms in March 2019. The internal memorandum cautioned that the rapid growth in such platforms is beginning to present a risk to financial stability, and noted that some consumers may not fully understand the risks associated with these platforms. However, the central bank also concluded that buy now, pay later services can be more beneficial to some consumers than credit cards.

CORPORATES
RESERVE BANK OF AUSTRALIA, AFTERPAY LIMITED – ASX APT, ZIP CO LIMITED – ASX Z1P, GOLDMAN SACHS AUSTRALIA PTY LTD

Australia’s economic interests at risk with RBA out of ammunition

Original article by John Kehoe
The Australian Financial Review – Page: 2 : 21-Dec-19

Paul Brennan of Citigroup notes that the Reserve Bank of Australia’s average cumulative interest rate cut in the last four monetary policy easing cycles was three percentage points. With the cash rate already at a record low of 0.75 following three rate cuts since June, experts warn that the RBA has limited ‘firepower’ in the event of an economic downturn. RBA governor Philip Lowe has ruled out negative interest rates; while he is open to quantitative easing, his preference is for fiscal stimulus and structural reform.

CORPORATES
RESERVE BANK OF AUSTRALIA, CITIGROUP PTY LTD, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE TREASURY

RBA to wait and see before February rate cut

Original article by David Rogers
The Australian – Page: 18 : 18-Dec-19

Financial markets have priced in a 62 per cent of an official interest rate cut in February, following the release of the federal government’s Mid-Year Economic and Fiscal Outlook. The minutes from the central bank’s latest board meeting indicate that it will assess the economic outlook before deciding whether to make any change to monetary policy at its first meeting for 2020. The minutes noted that some downside risks to the global economic outlook have receded in recent weeks.

CORPORATES
RESERVE BANK OF AUSTRALIA

Economists push out QE timing after Lowe speech

Original article by Matthew Cranston
The Australian Financial Review – Page: 8 : 28-Nov-19

Westpac’s chief economist Bill Evans now expects the Reserve Bank of Australia to pursue quantitative easing in June 2020, having previously forecast that it would commence a bond-buying program in February. Other economists have also revised their timetables for QE after RBA governor Philip Lowe signalled that this option is unlikely to be pursued unless the cash rate falls to 0.25 per cent. Citigroup’s Josh Williamson has ruled out any move to QE in 2020.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, CITIGROUP PTY LTD, HSBC AUSTRALIA HOLDINGS PTY LTD

Two cuts left in RBA arsenal

Original article by Patrick Commins
The Australian – Page: 1 & 6 : 27-Nov-19

Reserve Bank of Australia governor Philip Lowe has used a speech in Sydney to state that conventional monetary policy remains effective and the central bank is unlikely to consider quantitative easing unless the cash rate falls to 0.25 per cent. He indicated that the RBA would buy government bonds if it opted for QE. Lowe also described negative interest rates as the only monetary policy tool that is "truly unconventional", and emphasised that negatives rates are unlikely in Australia.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN LABOR PARTY

‘QE will do nothing’: fundies back infrastructure spending

Original article by Robert Guy
The Australian Financial Review – Page: 28 : 27-Nov-19

Quay Global Investors portfolio manager Chris Bedingfield contends that the Reserve Bank of Australia should not implement quantitative easing. He argues that the federal government should instead prioritise increased spending on infrastructure, noting that this will create jobs in the short-term and boost productivity in the long-term. Sarah Shaw of 4D Infrastructure also advocates investing in infrastructure to stimulate the economy.

CORPORATES
QUAY GLOBAL INVESTORS PTY LTD, 4D INFRASTRUCTURE PTY LTD, RESERVE BANK OF AUSTRALIA, BENNELONG FUNDS MANAGEMENT PTY LTD

Minutes show Reserve Bank was close to November cut

Original article by Matthew Cranston
The Australian Financial Review – Page: 8 : 20-Nov-19

The minutes of the Reserve Bank of Australia’s board meeting on 5 November show that the central bank gave serious consideration to reducing the cash rate to 0.5 per cent. However, board members took into account factors such as the likely effect of further monetary policy easing on savers and consumer confidence. The board ultimately concluded that the best course of action would be to wait until the impact of previous interest rate cuts became clear.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, CITIGROUP PTY LTD

QE coming next year: JPMorgan

Original article by David Rogers
The Australian – Page: 17 & 28 : 12-Nov-19

JPMorgan Australia’s chief economist Sally Auld expects the Reserve Bank to implement unconventional monetary policy measures in the December 2020 quarter. Auld still anticipates another official interest rate cut in February, but warns that this will be insufficient to stimulate the economy, prompting the central bank to reduce the cash rate to 0.25 per cent and commence a quantitative easing program in late 2020. However, Auld says quantitative easing is unlikely to be necessary if the federal government’s May 2020 Budget includes ‘meaningful’ fiscal stimulus.

CORPORATES
RESERVE BANK OF AUSTRALIA, JP MORGAN AUSTRALIA LIMITED, MORGAN STANLEY AUSTRALIA LIMITED, WESTPAC BANKING CORPORATION – ASX WBC