CENTRAL – AUSTRALIA

Plea to end unhealthy RBA cash rate

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Original article by Jacob Greber
The Australian Financial Review – Page: 5 : 26-Jun-18

Economists James Morley from the University of Sydney and Mark Crosby of Monash University say the Reserve Bank of Australia needs to increase official interest rates. Crosby says the cash rate is at an "unhealthy level" at just 1.5 per cent and it is safe to begin tightening monetary policy. Morley argues that there is scope for at least two rate rises without having any adverse impact on the economy. Former RBA board member Warwick McKibbin has called for an increase in the cash rate.

CORPORATES
RESERVE BANK OF AUSTRALIA, UNIVERSITY OF SYDNEY, MONASH UNIVERSITY, AUSTRALIAN NATIONAL UNIVERSITY, GOLDMAN SACHS AUSTRALIA PTY LTD, UNITED STATES. FEDERAL RESERVE BOARD

RBA’s Lowe urged to raise rates

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 6 : 25-Jun-18

The general consensus of market economists is that the Reserve Bank of Australia should leave official rates on hold at 1.5 per cent for the rest of 2018 and most of 2019. However, former RBA board member Warwick McKibbin says the central bank should increase the cash rate by at least 25 basis points, as interest rates are beginning to rise globally. He also argues that the RBA should gradually shift its focus from an inflation target of 2-3 per cent toward a nominal income target.

CORPORATES
RESERVE BANK OF AUSTRALIA, BANK OF ENGLAND, UNITED STATES. FEDERAL RESERVE BOARD, FEDERAL RESERVE BANK OF NEW YORK, EUROPEAN CENTRAL BANK, AUSTRALIAN NATIONAL UNIVERSITY, THE BROOKINGS INSTITUTION

RBA to keep interest rates on hold until 2020: Macquarie

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Original article by Patrick Commins
The Australian Financial Review – Page: 31 : 22-Jun-18

Macquarie Group economists Ric Deverell and Justin Fabo forecast that Australia’s unemployment rate will not fall below five per cent until 2020. They warn that "persistent" spare capacity in the economy will ensure that wages growth remains subdued in the near-term. As a result, they do not expect the Reserve Bank to tighten monetary policy until at least 2020. However, they note that a number of domestic and international factors could affect the timing of an interest rate rise.

CORPORATES
RESERVE BANK OF AUSTRALIA, MACQUARIE GROUP LIMITED – ASX MQG

Fed hikes put squeeze on banks

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Original article by Karen Maley
The Australian Financial Review – Page: 1 & 28 : 15-Jun-18

The US Federal Reserve has signalled that two more interest rate increases are likely in 2018, following its second rate rise for the year. The new target range for the federal funds rate is between 1.75% and 2%, while the Reserve Bank of Australia has kept its cash rate at 1.5% for almost two years. The divergence in monetary policy has coincided with rising wholesale borrowing costs for Australia’s major banks, as well as a recent spike in the bank bill swap rate. Shane Oliver of AMP says local banks could potentially respond by increasing their mortgage rates on investment and interest-only loans.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF AUSTRALIA, AMP LIMITED – ASX AMP, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, FINANCIAL STABILITY BOARD, DEUTSCHE BANK AG, SOCIETE GENERALE SA, BNP PARIBAS SA, GRUPO SANTANDER

House prices ‘won’t sway the RBA’

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Original article by James Glynn
The Australian – Page: 17 & 28 : 29-May-18

Reserve Bank of Australia board member Ian Harper says factors such as the low growth in wages means the central bank is unlikely to increase official interest rates in the near-term. He adds that slowing growth in residential property prices will also not influence the timing of a rise in the cash rate. Financial markets do not expect monetary policy to be tightened until at least late 2019.

CORPORATES
RESERVE BANK OF AUSTRALIA, MELBOURNE BUSINESS SCHOOL

No change in rate, and RBA predicting more economic acceleration

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Original article by Jacob Greber
The Australian Financial Review – Page: 3 : 2-May-18

The Reserve Bank of Australia’s decision to leave official interest rates unchanged on 1 May was widely anticipated. The cash rate has now been on hold for an unprecedented 21 months. RBA governor Philip Lowe said the central bank still expects an increase in wages and inflation to be gradual, as will a fall in the unemployment rate. However, Lowe again said the Australian economy is likely to expand by more than three per cent in 2018 and 2019, compared with just 2.4 per cent in 2017.

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

RBA talks up rate rise, but not just yet

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Original article by David Rogers
The Australian – Page: 17 & 24 : 18-Apr-18

The minutes of the Reserve Bank’s latest board meeting show that board members expect monetary policy to be tightened rather than eased, although they have indicated that this is unlikely in the near-term given the outlook for inflation and unemployment. Meanwhile, Bill Evans of Westpac says the central bank is likely to downgrade its growth forecast for the Australian economy in 2018 from 3.25 per cent to three per cent in its next statement on monetary policy.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, UBS HOLDINGS PTY LTD, CAPITAL ECONOMICS LIMITED

First rate rise will shock, warns RBA’s Lowe

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Original article by Jacob Greber
The Australian Financial Review – Page: 10 : 12-Apr-18

Reserve Bank of Australia governor Philip Lowe has reiterated that there is likely to be a gradual increase in economic growth and wages, which should ensure that interest rates remain on hold in the near-term. Lowe also used an Australia-Israel Chamber of Commerce speech to emphasise that the cash rate is expected to rise rather than fall when the central bank next adjusts monetary policy, and he noted that interests have not risen for more than seven years. Some economists now expect the cash rate to remain at 1.5 per cent until 2020.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA-ISRAEL CHAMBER OF COMMERCE

RBA keeps rates level for 18th meeting in row

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Original article by Jacob Greber
The Australian Financial Review – Page: 5 : 4-Apr-18

The general consensus of economists is that the Reserve Bank of Australia will not tighten monetary policy until 2019, after the cash rate was left unchanged at 1.5 per cent on 3 April. RBA governor Philip Lowe again stressed that there is likely to be a gradual fall in the unemployment rate and a rise in the inflation rate to the central bank’s target range. He also said low growth in wages is likely to persist for some time. The RBA has not adjusted official interest rates since August 2016.

CORPORATES
RESERVE BANK OF AUSTRALIA, INDEED INCORPORATED, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT

RBA in no hurry to follow Fed on interest rates

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Original article by David Rogers
The Australian – Page: 27 : 21-Mar-18

The Reserve Bank of Australia has previously forecast that economic growth would average around three per cent in 2018. However, the minutes of the central bank’s latest monthly board meeting show that it expects economic growth to exceed "potential growth" in 2018. Bill Evans of Westpac notes that the Reserve Bank deems potential growth to be 2.75 per cent. Meanwhile, there seems to be little prospect of a rise in Australia’s cash rate in the near-term, while the Federal Reserve is widely tipped to increase US rates in March.

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