Retirees hit but ‘it’s for the good of all’

Original article by Patrick Commins
The Australian – Page: 4 : 4-Nov-20

Reserve Bank governor Philip Lowe has conceded that retirees and savers will be hard hit by the decision to reduce the cash rate to a record low of 0.1 per cent. However, Lowe contends that they need to be mindful of the "collective good", arguing that lower rates will benefit the broader community by supporting spending and creating jobs. Rice Warner’s executive director Michael Rice notes that retirees who are only partly self-funded will be particularly hard hit by the decline in deposit rates, and many will become more reliant on the age pension.

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RESERVE BANK OF AUSTRALIA, RICE WARNER ACTUARIES PTY LTD

RBA’s shot in zero-sum rates game

Original article by Patrick Commins
The Australian – Page: 1 & 4 : 4-Nov-20

Reserve Bank of Australia governor Philip Lowe has flagged the use of "additional monetary policy options" if necessary, after reducing the cash rate to a record low and announcing a quantitative easing program. Lowe has indicated that the cash rate will remain at 0.1 per cent for 3-5 years, while the RBA’s three-year bond rate target has also been reduced to 0.1 per cent. Meanwhile, former RBA board member John Edwards has hailed the "courageous" and "historic" decision to pursue quantitative easing. The central bank will purchase about $5bn worth of federal and state government bonds each week over the next six months.

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RESERVE BANK OF AUSTRALIA

RBA lays ground for Cup Day cut

Original article by David Rogers, Patrick Commins
The Australian – Page: 13 & 20 : 16-Oct-20

Expectations of an official interest rate cut in November have been heightened by comments made by Reserve Bank of Australia governor Philip Lowe. He has told the Citi Investment conference that further easing of monetary policy is likely to "get more traction" as the economy re-opens than it would have at the COVID-19 pandemic’s peak. Kristina Clifton of the Commonwealth Bank says the RBA is likely to reduce the cash rate from 0.25 per cent to 0.1 per cent in November, and expand its bond-buying program to include five and 10-year government bonds.

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

Shock and awe budget rate cut to cushion bumpy recovery

Original article by Patrick Commins
The Australian – Page: 1 & 4 : 23-Sep-20

The Reserve Bank of Australia’s deputy governor Guy Debelle has signalled that there could be a further reduction in the cash rate, which fell to a record low of 0.25 per cent in March. The next scheduled meeting of the central bank’s board is on 6 October, when the federal government will also hand down the Budget. National Australia Bank’s chief economist Alan Oster says the cash rate is likely to be reduced to 0.1 per cent on this day or in November. He adds that further cutting the cash rate may not do much to stimulate the economy or create jobs,

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

$A doing its job to help stabilise the economy

Original article by Sarah Turner, Jonathan Shapiro
The Australian Financial Review – Page: 31 : 22-Apr-20

The Reserve Bank of Australia has bought $47bn worth of federal and state government bonds since 20 March. The central bank has progressively reduced its daily bond purchases from $5bn to just $500m since then, and it will now buy federal government bonds three times a week and state bonds just once a week. Meanwhile, RBA governor Philip Lowe says the Australian dollar fell more sharply than he had expected in March. It reached a low of $US0.5741 and has since recovered to around $US0.63. Lowe says the currency has been a "great shock-absorber" for the domestic economy over the last three decades.

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RESERVE BANK OF AUSTRALIA

Reserve Bank now important bond player

Original article by Sarah Turner
The Australian Financial Review – Page: 31 : 15-Apr-20

Su-Lin Ong of RBC Capital Markets says the federal government has issued some $48bn worth of bonds so far in 2019-20. She estimates that the Reserve Bank of Australia has bought about $36bn worth of these government bonds in the last three weeks, as part of its quantitative easing program. Westpac’s Damien McColough notes that the central bank has emerged as one of the largest bond fund managers in the local market. Meanwhile, Ong says government bond issuance for 2019-20 could potentially top $160bn.

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RBC CAPITAL MARKETS, RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC

Prepare to be hit but we’ll ease blow: RBA

Original article by Adam Creighton
The Australian – Page: 4 : 8-Apr-20

Reserve Bank of Australia governor Philip Lowe has indicated that the cash rate will remain at 0.25 per cent until inflation returns to its target range of 2-3 per cent and the unemployment rate falls to around 4.5 per cent. The central bank will also maintain its bond-buying program until these targets are achieved. Lowe has warned that the domestic economy faces a "very large economic contraction" due to the coronavirus, while he says the unemployment rate will rise to its highest level in many years. The RBA left the cash rate on hold at its April board meeting.

CORPORATES
RESERVE BANK OF AUSTRALIA

Reserve Bank likely to slow bond buying

Original article by Jonathan Shapiro
The Australian Financial Review – Page: 30 : 7-Apr-20

The Reserve Bank of Australia’s quantitative easing program commenced on 20 March, and the central bank initially began purchasing $5bn worth of commonwealth government bonds per day. It has bought some $31bn of such bonds to date, including $10bn in the week ended 3 April. The RBA has been gradually been winding back its bond buying, and Damien McColough of Westpac says that even if its current momentum is maintained it would hold about $80bn worth of government bonds by the end of June. This would constitute about 30 per cent of the government bonds on issue. The RBA has also bought some $5bn worth of state government bonds.

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

$105b bridge across the chasm

Original article by Matthew Cranston, James Eyers, James Frost, Jonathan Shapiro
The Australian Financial Review – Page: 1 & 4 : 20-Mar-20

Reserve Bank of Australia governor Philip Lowe has warned that the cash rate is likely to remain at the new record low of 0.25 per cent for three years. The emergency interest rate cut on 19 March is the RBA’s first out-of-cycle move since 1997; it has coincided with the announcement of a government bond-buying program which aims to ensure that the benchmark three-year bond yield remains at around 0.25 per cent. Lowe says there will be no limit to the bond-buying program. The RBA has also announced a $90bn line of credit for banks to provide low-interest loans to small and medium enterprises; the federal government will provide an additional $15bn to small lenders to help with their funding.

CORPORATES
RESERVE BANK OF AUSTRALIA

Economic dose of medicine

Original article by Patrick Commins
The Australian Financial Review – Page: 1 & 4 : 17-Mar-20

The Reserve Bank of Australia is set to make an emergency interest rate cut in response to the coronavirus pandemic. RBA governor Philip Lowe has also flagged a government bond purchasing program to ensure that financial markets continue to function smoothly. The central bank injected some $5.9bn into the banking system on 16 March in order to boost liquidity. The US Federal Reserve and the Reserve Bank of New Zealand announced out-of-cycle interest rate cuts on 16 March; US rates have been reduced to near zero and NZ rates have been slashed by 75 basis points to just 0.25 per cent.

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RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF NEW ZEALAND