CENTRAL – AUSTRALIA

Rates pressure, costs keep lid on retail sales

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Original article by Patrick Commins
The Australian – Page: 4 : 29-May-24

Data from the Australian Bureau of Statistics shows that retail sales rose by just 0.1 per cent in April, after falling by 0.4 per cent in March. The seasonally adjusted data also shows that retail sales increased by 1.3 per cent year-on-year in April. UBS chief economist George Tharenou say younger Australians and people with mortgages are primarily reducing their spending, while this is being offset by increased expenditure by older people and households that have no debt. Tharenou adds that the ongoing weakness in retail sales will make it less urgent for the Reserve Bank to increase the cash rate; he still expects an interest rate cut in February.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, UBS HOLDINGS PTY LTD

Inflation may drop below 3pc by July

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Original article by Patrick Commins
The Australian – Page: 5 : 28-May-24

Monthly inflation data to be released on Wednesday is expected to show that consumer price growth was steady at 3.5 per cent in the year to April. Commonwealth Bank economist Stephen Wu says energy subsidies in recent federal and state budgets will flow through to consumers in July and August, and they may be sufficient to reduce consumer price growth by 0.6 per cent in those months; this would restore inflation to the Reserve Bank’s target range of 2-3 per cent on a quarterly basis well ahead of its forecast of late 2025. However, CBA senior economist Belinda Allen says this would probably not prompt the RBA to reduce the cash rate, as it is likely to focus on underlying inflationary pressures.

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

Rate rise still priced in despite Chalmers’ forecast

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Original article by Alex Gluyas
The Australian Financial Review – Page: 28 : 14-May-24

AMP’s chief economist Shane Oliver is amongst those who have questioned the federal government’s forecast that the headline inflation rate will fall to 3.5 per cent by the end of June. He notes that it is uncertain as to how cost-of-living relief in the budget will impact on inflation, given that the financial year ends in about six weeks. Paul Bloxham of HSBC in turn says the budget is likely to boost the Reserve Bank’s preferred measure of core inflation, which is likely to rule out an interest rate cut in 2024. Meanwhile, futures traders still expect the central bank to increase the cash rate this year.

CORPORATES
AMP LIMITED – ASX AMP, HSBC HOLDINGS PLC, RESERVE BANK OF AUSTRALIA

Bullock’s red flag on inflation

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Original article by Patrick Commins
The Australian – Page: 1 & 5 : 8-May-24

Reserve Bank of Australia governor Michele Bullock says she is "alert and vigilant" to the risk of inflation staying too high for too long. The RBA left the cash rate on hold at 4.35 per cent on Tuesday, and Bullock says the RBA board believes that it is at the right level to return inflation to the target range of 2-3 per cent in 2025. However, Bullock adds that doing so is likely to be a bumpy ride, while she has flagged the possibility of further interest rate increases if services inflation remains above the central bank’s target range. Meanwhile, Bullock has emphasised the need for Treasurer Jim Chalmers to ensure that the budget on 14 May is not inflationary.

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

RBA’s next move will still be a cut: investors

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Original article by Cecile Lefort
The Australian Financial Review – Page: 29 : 30-Apr-24

The US Federal Reserve is now widely tipped to deliver its first interest rate cut in December, after the latest inflation data dampened expectations of a rate cut in June. Meanwhile, bond traders have now priced in a 50 per cent chance that the Reserve Bank of Australia will increase the cash rate to 4.6 per cent by September. Both central banks are expected to leave interest rates unchanged at their upcoming board meetings. Kapstream Capital portfolio manager Kris Bernie still expects the RBA to reduce the cash rate, although he says this is now likely to be delayed until 2025.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF AUSTRALIA, KAPSTREAM CAPITAL PTY LTD

RBA to increase cash rate to 5.1pc, says top forecaster

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 4 : 26-Apr-24

The consensus of economists is that the Reserve Bank of Australia will upgrade its near-term inflation forecast in May, following the release of the latest CPI data. A stronger-than-expected headline inflation rate of one per cent for the March quarter – and 3.6 per cent in the year to March – has also prompted economists to forecast that the RBA will delay its first official interest rate cut. However, while most economists expect the RBA’s next move will be a rate cut, Judo Bank’s chief economic adviser Warren Hogan has forecast that it will increase the cash rate three times in 2024, from 4.35 per cent at present to 5.1 per cent. He had previously anticipated that the first rate cut would occur in early 2025.

CORPORATES
RESERVE BANK OF AUSTRALIA, JUDO BANK PTY LTD, JUDO CAPITAL HOLDINGS LIMITED – ASX JDO

Fears interest rates could be hiked in 2024

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Original article by Sarah Sharples
Herald Sun – Page: Online : 24-Apr-24

Australia’s employment and inflation outlook has prompted speculation that the Reserve Bank could increase rather than reduce the cash rate in 2024. Another official interest rate rise would put further pressure on mortgage holders. Data from Roy Morgan shows that 1.53 million mortgage holders were at risk of mortgage stress in March; CEO Michele Levine says Roy Morgan’s modelling shows that this would rise to 1.57 million mortgage holders if the central bank were to increase the cash rate by 0.25 per cent in both May and June, to 4.85 per cent.

CORPORATES
RESERVE BANK OF AUSTRALIA, ROY MORGAN LIMITED

‘Can’t rule out a further rate rise’: economists survey reveals caution

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Original article by Cecile Lefort
The Australian Financial Review – Page: 29 : 23-Apr-24

The consensus of economists polled by the Australian Financial Review is that the Reserve Bank will reduce the cash rate in November. However, financial market pricing suggests that the central bank will leave official interest rates unchanged for the rest of the year. Meanwhile, Ben Picton from Rabobank says another interest rate increase remains a possibility if inflation begins to accelerate. CPI data for the March quarter will be released on Wednesday.

CORPORATES
RESERVE BANK OF AUSTRALIA, RABOBANK AUSTRALIA LIMITED

Bullock backs Chalmers in RBA stoush with Coalition

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Original article by Michael Read
The Australian Financial Review – Page: 4 : 20-Mar-24

Treasurer Jim Chalmers wants the Coalition’s support for legislation to overhaul the Reserve Bank of Australia, as he does not want to negotiate with the Greens. The Coalition is concerned that Chalmers wants the RBA existing board members to be appointed to its new governance board so he can "stack" the interest rates-setting board with people who are aligned with Labor. RBA governor Michelle Bullock says she would like "continuity with respect to both boards", but adds that she has no firm views on just how many current board members should serve on each of the new boards.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY

RBA keeps rate rise in reserve

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 8 : 20-Mar-24

The Reserve Bank of Australia’s decision to leave the cash rate unchanged at 4.35 per cent on Tuesday had been widely expected. However, the RBA appears to have adopted a more neutral monetary policy stance in the statement it released after the two-day board meeting. It stated that the board is "not ruling anything in or out" with regard to the next interest rate move; in contrast, the RBA stated in February that a further increase in interest rates "cannot be ruled out". Financial markets have now fully priced in a 25 basis point reduction in the cash rate in September, as well as a strong chance of another rate cut in December.

CORPORATES
RESERVE BANK OF AUSTRALIA