CENTRAL – AUSTRALIA

RBA keeps cash rate at 1.5pc, but sees clouds on horizon

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Original article by Sarah Turner
The Australian Financial Review – Page: 9 : 3-Oct-18

The latest quarterly survey of economists shows that the general consensus is that a rise in the cash rate is unlikely before late 2019. The Reserve Bank of Australia left official interest rates unchanged on 2 October, and governor Philip Lowe has reiterated that progress in reducing the unemployment rate and lifting inflation to the RBA’s target range of 2-3 per cent is likely to be gradual. Gareth Aird of the Commonwealth Bank expects the outlook for the housing market to influence the timing of any change in monetary policy.

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

Rates gulf with US is at its widest yet

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Original article by Patrick Commins
The Australian Financial Review – Page: 30 : 28-Sep-18

The divergence between official interest rates in Australian and the US has widened to its highest level since the Reserve Bank adopted inflation targeting in the 1990s. The Federal Reserve’s 25 basis point increase in the cash rate is its eighth rate rise in less than three years, while the Reserve Bank has left rates on hold since August 2016. Bloomberg expects another two US rate rises in the next year, while Australian rates could well remain on hold. Economists say a further widening of the interest rate differential could put downward pressure on the Australian dollar.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF AUSTRALIA, BLOOMBERG LP, WESTPAC BANKING CORPORATION – ASX WBC, CAPITAL ECONOMICS LIMITED

Trade war risk to our currency safety valve

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Original article by Sarah Turner
The Australian Financial Review – Page: 13 : 21-Sep-18

Economic modelling undertaken by the Reserve Bank in March concluded that the Australian dollar could potentially rise by up to six per cent in the event of a global trade war. This in turn could cause the domestic economy to contract by up to 3.5 per cent over five years. This is one of three potential scenarios that were examined by the central bank at the time, in response to the Trump administration’s decision to impose tariffs on imported steel and aluminium.

CORPORATES
RESERVE BANK OF AUSTRALIA

Cost of home loan less than 2017: RBA

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Original article by James Glynn
The Australian – Page: 22 : 19-Sep-18

A number of Australian lender have increased their mortgage interest rates since the Reserve Bank’s last board meeting on 4 September. However, the minutes of the meeting note that the cost of financing a home loan remains lower than at the same time in 2017. The Reserve Bank also observed that bank funding costs are still low by historical standards. In addition, the Reserve Bank gave indications that the next movement in the cash rate is likely to be upward, although this is not expected in the near-term.

CORPORATES
RESERVE BANK OF AUSTRALIA

Move likely to delay RBA hike

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Original article by Ronald Mizen
The Australian Financial Review – Page: 7 : 31-Aug-18

Data from Bloomberg shows that financial markets view the chances of a reduction in the cash rate by the end of 2019 to be just 58.7 per cent in the wake of Westpac’s out-of-cycle increase in its variable mortgage interest rates. Shane Oliver of AMP Capital says the other major banks are likely to follow, which will in turn mean that the Reserve Bank is likely to leave the cash rate on hold until least 2020. Oliver and David Bassanese of Betashares Capital also suggest that the central bank could potentially reduce the cash rate if Westpac’s rivals increase their interest rates.

CORPORATES
AMP CAPITAL INVESTORS LIMITED, BETASHARES CAPITAL LIMITED, RESERVE BANK OF AUSTRALIA, BLOOMBERG LP, BIS OXFORD ECONOMICS PTY LTD, CANSTAR PTY LTD, ST GEORGE BANK LIMITED, BANK OF MELBOURNE LIMITED, BANK OF SOUTH AUSTRALIA LIMITED, RAMS HOME LOANS PTY LTD

Ticehurst supports lowering RBA inflation target

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Original article by Vesna Poljak
The Australian Financial Review – Page: 31 : 17-Aug-18

Several leading economists have urged the Reserve Bank of Australia to scale back its inflation target. Andrew Ticehurst of Nomura Australia argues that the RBA’s midpoint of the 2-3 per cent target range is higher than that of its counterparts in the US, New Zealand and the UK, while he notes that some Asian central banks have reduced their inflation target without any adverse impact. Ticehurst says the RBA should "fine-tune" the inflation target by reducing it to around two per cent.

CORPORATES
RESERVE BANK OF AUSTRALIA, NOMURA AUSTRALIA LIMITED, BETASHARES CAPITAL LIMITED, UNIVERSITY OF TECHNOLOGY, SYDNEY, BANK OF KOREA, BANK INDONESIA

RBA’s Lowe has his share of doubters

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 32 : 10-Aug-18

The Reserve Bank of Australia has not increased the official cash rate since November 2010, but governor Philip Lowe indicated on 8 August that it may not be long before it has to lift rates. An increase in interest rates would mean that the RBA felt that its inflation target of 2.5 per cent might be not be far off being reached, but some economists are not so certain about this, given the experience of economies in other parts of the world.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, MACQUARIE GROUP LIMITED – ASX MQG

Inflation target here to stay, says Lowe

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Original article by Patrick Commins
The Australian Financial Review – Page: 5 : 9-Aug-18

The Reserve Bank of Australia remains committed to its long-term goal of returning the inflation rate to 2.5 per cent. Central bank governor Philip Lowe says the inflation target will not be reviewed. Lowe has also indicated that achieving the inflation target is not a prerequisite for increasing official interest rates. He added that the statement of monetary policy to be released on 10 August will show that the RBA does not expect the unemployment rate to fall to five per cent before the end of 2020.

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

Slowly but surely, the RBA is turning positive

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Original article by David Rogers
The Australian – Page: 27 : 8-Aug-18

As expected, the Reserve Bank of Australia left interest rates on hold at 1.5 per cent on 7 August, marking two years since its last change in monetary policy. The RBA has maintained its guidance for economic growth in 2018 and 2019, while it expects the unemployment rate to ease to around five per cent over the next several years. The central bank has also indicated that although wages growth is likely to remain low, it should rise over time due to the improvement in the domestic economy.

CORPORATES
RESERVE BANK OF AUSTRALIA, AMP CAPITAL INVESTORS LIMITED, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

RBA set to celebrate two years on hold

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Original article by Patrick Commins
The Australian Financial Review – Page: 5 : 6-Aug-18

The Reserve Bank of Australia has left the cash rate unchanged at 1.5 per cent since August 2016, and the central bank is widely tipped to maintain the status quo at its board meeting on 7 August 2018. Bond traders have priced in a 20 per cent chance of a rate rise by the end of 2018, and an 80 per cent chance by mid-2019. The RBA has previously signalled that interest rates are likely to remain on hold until signs of wages growth emerge, and analysts generally believe that there will need to be upward pressure on wages for the unemployment rate to fall below five per cent.

CORPORATES
RESERVE BANK OF AUSTRALIA