INFLATION (FINANCE) – AUSTRALIA

Inflation tipped to rise to highest level in 32 years

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Original article by Emma Rapaport
The Australian Financial Review – Page: 29 : 29-Nov-22

The latest monthly inflation data will be released on Wednesday. Catherine Birch from the ANZ Bank expects the data to show that the headline inflation rate rose from 7.3 per cent in September to 7.8 per cent in October. Birch also forecasts that the Reserve Bank’s preferred measure of trimmed mean inflation will rise from 5.4 per cent to 5.9 per cent. The ANZ expects the quarterly headline inflation rate to peak at eight per cent in the final three months of 2022 and remain above the central bank’s target range of 2-3 per cent until the end of 2024. It also anticipates that the Reserve Bank will begin to ease monetary policy in November 2024.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, RESERVE BANK OF AUSTRALIA

NZ Reserve Bank nails our RBA’s failure

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Original article by Terry McCrann
Herald Sun – Page: 49 : 24-Nov-22

Reserve Bank of Australia governor Philip Lowe has stated that wage outcomes must be consistent with the return of inflation to the central bank’s target range of 2-3 per cent. Increasing wages in line with the inflation rate would inevitably result in large-scale job losses and further boost inflation. Allowing inflation to remain well above the target range for too long would also heighten the risk of a wage-price spiral. The Reserve Bank of New Zealand recognises these risks; its cash rate was increased by 75 basis points on Wednesday, and it seriously considered a one per cent increase. In contrast, the RBA increased the cash rate by just 25 basis points in November, despite the inflation rate in both countries being nearly identical. NZ’s cash rate is now 4.25 per cent, but Australia’s cash rate will still be just 3.1 per cent if – as expected – the RBA announces a 25 basis point increase in December.

CORPORATES
RESERVE BANK OF AUSTRALIA, RESERVE BANK OF NEW ZEALAND

Economists tip supersized Cup day rate rise

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Original article by Ronald Mizen
The Australian Financial Review – Page: 11 : 28-Oct-22

Westpac’s chief economist Bill Evans expects the Reserve Bank of Australia to increase the cash rate by 50 basis points in November, in response to the latest inflation data. Westpac now anticipates that official interest rates will peak at 3.85 per cent, a view shared by the Commonwealth Bank. National Australia Bank and ANZ in turn expect interest rates to peak at 3.6 per cent and 3.1 per cent respectively. Meanwhile, financial markets have priced in a 25 basis point increase in November.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

No doubt interest rates will continue to climb: RBA

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Original article by Ronald Mizen
The Australian Financial Review – Page: 2 : 19-Oct-22

The Reserve Bank of Australia’s deputy governor Michele Bullock says inflation is still too high and further rises in the cash rate will be necessary in order to return it to the RBA’s target range of 2-3 per cent. Bullock has told the Australian Finance Industry Association’s annual conference that the RBA believes that it can reduce the inflation rate while avoiding a recession and preserving most of the jobs that have been created in recent times. Meanwhile, the minutes from the RBA’s latest meeting show that the board was of the view that slowing the pace of rate rises in October will give it time to assess incoming economic data.

CORPORATES
RESERVE BANK OF AUSTRALIA

Inflation Expectations down 0.2% points to 5.4% in September – before the petrol excise returned in full

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Original article by Roy Morgan
Market Research Update – Page: Online : 18-Oct-22

In September 2022, Australians expected inflation of 5.4% annually over the next two years, down 0.2% points from August. Inflation Expectations in September are 0.9% points higher than a year ago, and 2.2% points above the record low of 3.2% reached in June 2020. Although Inflation Expectations have dropped for a second straight month, the return of the full petrol excise at the end of September is set to lead to higher inflation expectations going forward. A deeper look at Inflation Expectations by employment status shows that the largest increase has been for people who are unemployed, up 2.6% points to 6.4% since the measure reached a record low in June 2020. The second highest Inflation Expectations are for those people who are under-employed, employed part-time but wanting more work, up 2% points to 5.8% since June 2020. On a State-based level Inflation Expectations were highest in New South Wales at 5.8% and Tasmania at 5.6%. The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source which has interviewed an average of 4,700 Australians aged 14+ per month over the last decade, and includes interviews with 6,069 Australians aged 14+ in September.

CORPORATES
ROY MORGAN LIMITED

Chalmers warns of rates-driven inflation

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Original article by Ronald Mizen, Matthew Cranston
The Australian Financial Review – Page: 4 : 12-Oct-22

Treasurer Jim Chalmers says the world is facing a "substantial" global economic downturn, although he adds that the federal government’s first Budget on 25 October will not forecast a recession in Australia. Chalmers has also warned that the widening gap between interest rates in Australia and the US could boost inflation by putting downward pressure on the Australian dollar and making imports more expensive. Meanwhile, the International Monetary Fund now expects the Australian economy to grow by just 1.9 per cent in 2023; it had previously forecast growth of 2.2 per cent. The IMF has also downgraded its global growth forecast.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, INTERNATIONAL MONETARY FUND

RBA slows its rate pace from breakneck to merely galloping

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Original article by Patrick Commins
The Australian – Page: 1 & 4 : 5-Oct-22

Reserve Bank of Australia governor Philip Lowe has indicated that further interest rises are likely as the central bank seeks to bring inflation under control. The RBA defied the expectations of most economists and investors by increasing the cash rate by just 25 basis points on Tuesday, lifting it to 2.6 per cent. The RBA has become the first major central bank to scale back the size of interest rate increases in the current monetary policy tightening cycle, having increased the cash rate by 50 basis points at each of its previous four monthly board meetings. Australia’s four major banks have increased their variable mortgage interest rates by 25 basis points in line with the cash rate.

CORPORATES
RESERVE BANK OF AUSTRALIA

RBA deliberately setting up for a recession: ACTU

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Original article by Michael Read, David Marin-Guzman
The Australian Financial Review – Page: 4 : 10-Aug-22

The ACTU has released a policy paper which argues that full and secure employment should be the top macroeconomic priority for the Jobs and Skills Summit. The report was written by Jim Stanford from the Centre for Future Work; he argues that the Reserve Bank’s "whatever it takes" approach to returning inflation to its target range means it is willing to cause a recession and massive job losses in order to do so. The ACTU wants the summit to consider a fairer and more comprehensive inflation-reducing policy, and greater regulation of labour markets to ensure that real wages growth is in line with productivity.

CORPORATES
ACTU, THE AUSTRALIA INSTITUTE LIMITED. CENTRE FOR FUTURE WORK, RESERVE BANK OF AUSTRALIA

Inflation Expectations up 0.2% points to 5.9% in July – the highest monthly rating since August 2012

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Original article by Roy Morgan
Market Research Update – Page: Online : 10-Aug-22

In July 2022, Australians expected inflation of 5.9% annually over the next two years, up 0.2% points from June. Inflation Expectations in July are now 1.8% points higher than a year ago, and 2.5% points above the near record low of 3.4% in July 2020. A look at Inflation Expectations by socio-economic quintile shows large increases across the board since the measure hit record lows in mid-2020 during Victoria’s second COVID-19 wave. Inflation Expectations are lowest for the top ‘AB Quintile’ at 5.3%, although this is up 2.8% points since mid-2020 – the equal largest increase of any socio-economic quintile. Inflation Expectations are progressively higher for each subsequent socio-economic quintile. On a State-based level Inflation Expectations were highest in Tasmania in July at 7%, far higher than any other State. Next highest was the largest State of NSW at 6.3% – also well above the national average. The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source which has interviewed an average of 4,700 Australians aged 14+ per month over the last decade, and includes interviews with 7,484 Australians aged 14+ in July 2022.

CORPORATES
ROY MORGAN LIMITED

Higher interest rates tipped to bite

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Original article by Ronald Mizen
The Australian Financial Review – Page: 1 & 4 : 3-Aug-22

Reserve Bank of Australia governor Philip Lowe has reiterated that higher interest rates are necessary to return inflation to the target range of 2-3 per cent and to create a sustainable balance of demand and supply. Financial markets are now pricing in a cash rate of three per cent by December, following the RBA’s third consecutive increase of 50 basis points on Tuesday. The cash rate is now at a six-year high of 1.85 per cent, and many economists expect a rate rise of either 25 or 50 basis points in September. Meanwhile, the RBA has downgraded its economic growth forecast for both 2023 and 2024 to just 1.75 per cent, while it expects the official unemployment rate to reach four per cent by the end of 2024.

CORPORATES
RESERVE BANK OF AUSTRALIA