INFLATION (FINANCE) – AUSTRALIA

ANZ-Roy Morgan Inflation Expectations in late June have stabilised at 4.8% – down only slightly from the month of May

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Original article by Roy Morgan
Market Research Update – Page: Online : 26-Jun-24

The latest weekly ANZ-Roy Morgan Inflation Expectations are 4.8% for the week of June 17-24. This figure is below the average so far this year of 5.0%, and down 0.1% points from the month of May. A look at monthly Inflation Expectations for May 2024 shows the measure at 4.9% for the month – the equal lowest monthly figure so far this year, and down 0.3% points from April 2024 (5.2%). Looking back over the last few months, since the start of the year, weekly Inflation Expectations have moved in a narrow band of 4.8%-5.3% and averaged 5.0%. The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source, which has interviewed an average of around 5,100 Australians aged 14+ per month over the last decade, and includes interviews with 6,026 Australians aged 14+ in May 2024.

CORPORATES
ROY MORGAN LIMITED, AUSTRALIAN BUREAU OF STATISTICS

Treasurer on the defensive as RBA raises alarm over big-spending budgets

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Original article by Patrick Commins
The Australian – Page: 1 & 4 : 19-Jun-24

Reserve Bank governor Michele Bullock says the central bank’s board is prepared to "do what is necessary" to restore inflation to its target range by mid-2025. The RBA’s decision on Tuesday to leave the cash rate unchanged at 4.35 per cent had been widely expected by economists. Bullock has indicated that the board had considered a rate rise, while a rate cut had not been on the agenda; she notes that the inflation figures for April were "a bit higher than expected". The RBA also expressed concern in its monetary policy statement that cost-of-living relief and other spending measures in federal and state budgets may fuel inflation. However, Treasurer Jim Chalmers says the government’s strategy is "the right one".

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

Outlier economist predicts two rate rises this year

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Original article by Matt Bell
The Australian – Page: 15 : 18-Jun-24

Economists at three of Australia’s four major banks are of the view that interest rates have peaked and the Reserve Bank of Australia will begin easing monetary policy in November. Other economists expect the first rate cut in 2025. However, Judo Bank’s economic adviser Warren Hogan expects the RBA to increase the cash rate in both August and November. He says the central bank’s board will be concerned about recent economic data such as higher-than-expected jobs growth in May, which suggests that inflation will remain above the target range. He adds that tax cuts and governments’ cost-of-living relief may add to inflation.

CORPORATES
JUDO BANK PTY LTD, RESERVE BANK OF AUSTRALIA

RBA rate rise still likely even after wage review

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Original article by Cecile Lefort
The Australian Financial Review – Page: 27 : 4-Jun-24

Su-Lin Ong from RBC Capital Markets says the Reserve Bank of Australia will most likely have welcomed the Fair Work Commission’s decision to limit the minimum wage increase to 3.75 per cent on Monday. Financial markets had been concerned that the minimum wage would be increased by at least four per cent, while economists had warned that a rise of this size would have complicated the RBA’s efforts to restore inflation to its target range. Bond traders have now priced in a 14 per cent chance of an interest rate rise by the end of 2024, while they have fully priced in a rate cut by August 2025.

CORPORATES
RBC CAPITAL MARKETS, AUSTRALIA. FAIR WORK COMMISSION, RESERVE BANK OF AUSTRALIA

ANZ-Roy Morgan Inflation Expectations in late May have dropped to 4.9% after spiking in April as petrol prices increased

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Original article by Roy Morgan
Market Research Update – Page: Online : 29-May-24

The latest weekly ANZ-Roy Morgan Inflation Expectations are at 4.9% for the week of May 20-26. This represents a slight decline from the average so far this year of 5.0%, and a pullback from the month of April (5.2%). A look at monthly Inflation Expectations for April 2024 shows the measure at 5.2% for the month – the highest monthly figure so far this year and up 0.3% points from March 2024 (4.9%). This is the largest monthly increase in Inflation Expectations since June 2023, when the measure increased 0.4% points to 5.6%. Looking back over the last few months, since the start of the year, weekly Inflation Expectations have moved in a narrow band of 4.8% – 5.3% and averaged 5.0%. The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source, which has interviewed an average of around 5,100 Australians aged 14+ per month over the last decade, and includes interviews with 7,593 Australians aged 14+ in April 2024.

CORPORATES
ROY MORGAN LIMITED, AUSTRALIAN BUREAU OF STATISTICS

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

Albanese vows to get the job done before calling an election

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Original article by Joe Hildebrand
The Daily Telegraph – Page: Online : 22-May-24

Prime Minister Anthony Albanese has marked the second anniversary of his government by ruling out an early election, stating that Labor will not to go to the polls until it has addressed the cost-of-living crisis. He adds that reducing the inflation rate is his government’s top priority, and Labor will not focus on its re-election campaign until 2025. Albanese has also noted that handing down a budget amid the current economic conditions is challenging, with the need to balance providing cost-of-living relief with the focus on combating inflation.

CORPORATES
AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET

Cost-of-living handouts that bust inflation a trick

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Original article by Patrick Commins, Joe Kelly
The Australian – Page: 1 & 4 : 14-May-24

The federal government has confirmed that the 2024 budget will feature measures to combat inflation and the cost-of-living crisis, including electricity bill rebates and rental assistance. However, former Reserve Bank of Australia board member Warwick McKibbin contends that using government subsidies to combat inflation is a "political trick" that will not address underlying price pressures in the economy. McKibbin has also questioned the Treasury’s forecast that inflation will return to the RBA’s target range of 2-3 per cent by the end of 2024. He adds that the Treasury and the RBA have underestimated the inflationary impact of the revised stage-three personal income tax cuts that take effect on 1 July.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, 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