INFLATION (FINANCE) – AUSTRALIA

Pain, blame and, at this rate, it’s not over

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Original article by Patrick Commins
The Australian – Page: 1 & 4 : 7-Jun-23

Reserve Bank of Australia governor Philip Lowe has defended the decision to increase the case rate by 25 basis points to 4.1 per cent on Tuesday. He says the 12th rate rise since May 2022 was necessary to provide greater confidence that inflation will return to the target range within a reasonable timeframe. He also cautioned that further rate rises may be needed, depending on the outlook for the economy and inflation. The Australian Chamber of Commerce & Industry contends that the recent 5.75 per cent increase in the minimum wage had forced the RBA’s hand. However, Treasurer Jim Chalmers rejects suggestions that the minimum wage increase and the federal government’s 9 May budget were to blame for the latest rate rise. The cash rate is now at its highest level since April 2012.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN CHAMBER OF COMMERCE AND INDUSTRY, AUSTRALIA. DEPT OF THE TREASURY

Inflation Expectations dropped 0.3% points to 5.3% in April 2023

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Original article by Roy Morgan
Market Research Update – Page: Online : 17-May-23

In April 2023, Australians expected inflation of 5.3% annually over the next two years, down 0.3% points from March. The monthly decrease in Inflation Expectations came before the RBA decided to increase interest rates in early May and before last week’s Federal Budget. The monthly decrease in April has been sustained in the first two weeks of May, with weekly Inflation Expectations still at 5.3% in mid-May and averaging 5.3% since late March. A look at Inflation Expectations on a State-based level shows Inflation Expectations declining in most States in April; however, Queensland and Tasmania bucked the trend. A key factor to take account of is that Queensland and Tasmania are the two most decentralised States in Australia, with the majority of the population living outside the respective Capital Cities. The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source, which has interviewed an average of around 4,900 Australians aged 14+ per month over the last decade and includes interviews with 7,489 Australians aged 14+ in April.

CORPORATES
ROY MORGAN LIMITED, AUSTRALIAN BUREAU OF STATISTICS

Kickstart productivity or be kicked: RBA

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Original article by Patrick Commins, Giuseppe Tauriello
The Australian – Page: 1 & 4 : 17-May-23

The minutes from the Reserve Bank of Australia’s latest board meeting show that the decision to increase the cash rate by 25 basis points in May was a "finely balanced" one. Amongst other things, the board members noted that the nation’s declining productivity since the onset of the COVID-19 pandemic could make it difficult to bring inflation back under control. The RBA has warned that further interest rate increases are likely unless productivity is ‘kickstarted’. Analysts believe that quarterly wage price index data to be released on Wednesday could determine whether the RBA increases the cash rate in June.

CORPORATES
RESERVE BANK OF AUSTRALIA

Budget warning after RBA shock

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Original article by Michael Read, Phillip Coorey
The Australian Financial Review – Page: 1 & 6 : 3-May-23

Treasurer Jim Chalmers says the Reserve Bank of Australia’s decision to increase the cash rate to 3.85 per cent on Tuesday underlines the fact that inflation remains the primary challenge for the domestic economy. Chalmers adds that the latest rate increase highlights the need to ensure that the budget on 9 May does not add to Australia’s inflation outbreak. Amid calls for an increase in welfare payments, Chalmers has stresssed that the budget will include "responsible cost-of-living relief" that does not add to inflation. Meanwhile, RBA governor Philip Lowe has conceded that further interest rate rises may be needed in coming months in order to reduce inflation to the target range of 2-3 per cent; however, he says the RBA does not need to get inflation back to the target straight away, while it also cannot take too long to do so.

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

Inflation Expectations increased 0.3% points to 5.6% in March 2023 – the first monthly increase since November 2022

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Original article by Roy Morgan
Market Research Update – Page: Online : 19-Apr-23

In March 2023, Australians expected inflation of 5.6% annually over the next two years, up 0.3% points from February. The monthly increase in Inflation Expectations came before the RBA decided to pause its cycle of interest rate rises in early April. The monthly increase in March has been sustained in the first two weeks of April, with weekly Inflation Expectations now at 5.6% in mid-April and averaging 5.6% over the last six weeks. A look at Inflation Expectations on a State-based level shows rising Inflation Expectations across the Australian mainland in March, although there was a significant decline in the island state of Tasmania. Inflation Expectations were highest in South Australia at 5.9% (up 0.9% points from a month ago) in March ahead of New South Wales at 5.7% (up 0.3% points) and Queensland also at 5.7% (up 0.1% points). The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source, which has interviewed an average of around 4,900 Australians aged 14+ per month over the last decade and includes interviews with 5,987 Australians aged 14+ in March.

CORPORATES
ROY MORGAN LIMITED, AUSTRALIAN BUREAU OF STATISTICS

RBA hits pause, for now

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 4 : 5-Apr-23

Reserve Bank of Australia governor Philip Lowe has emphasised that the interest rate pause on Tuesday does not necessarily mean that the cash rate has peaked. He says the decision to leave rates on hold at 3.6 per cent in April will give the RBA board more time to assess the state of the economy and the outlook. Lowe added that further tightening of monetary policy may be needed to restore inflation to the target range of 2-3 per cent. Financial markets have now priced in a 22 per cent chance of a rate rise in May, compared with 40 per cent prior to the monthly board meeting. Economists say that inflation data for the March quarter will be a key factor in the RBA’s interest rates decision in May.

CORPORATES
RESERVE BANK OF AUSTRALIA

RBA signals rates pause amid warning on woeful productivity

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Original article by Tom Dusevic
The Australian – Page: 1 & 4 : 22-Mar-23

The minutes from the Reserve Bank of Australia’s board meeting on 7 March show that it may be open to leaving the cash rate on hold in April. The minutes note that RBA board members agreed to reconsider the case for a pause at the April meeting, as this would provide it with additional time to reassess the outlook for the economy. The board also noted that a rate pause will be appropriate at some point in order to more fully assess the effect of the 10 consecutive interest rate increases to date. The minutes show that the RBA board is also concerned about Australia’s low level of productivity and its impact on inflation.

CORPORATES
RESERVE BANK OF AUSTRALIA

RBA ‘will do what’s necessary’, but end of rate rises in sight

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Original article by Patrick Commins
The Australian – Page: 1 & 2 : 8-Mar-23

Reserve Bank of Australia governor Philip Lowe adopted a more dovish tone on Tuesday following the latest 25 basis point increase in the cash rate, to 3.6 per cent. He said the RBA board expects that further tightening of monetary policy will be needed to ensure that inflation returns to the target range of 2-3 per cent. He added that the board is of the view that the current period of high inflation will be temporary. Lowe had stated after the RBA’s February board meeting that "further increases in interest rates will be needed over the months ahead". Josh Williamson of Citigroup says this change in tone suggests that the end of rate rises is in sight, and there could potentially be just one more in the current monetary policy tightening cycle. The cash rate is now at its highest level since May 2012.

CORPORATES
RESERVE BANK OF AUSTRALIA, CITIGROUP PTY LTD

Inflation: Act now or hurt like 1990s

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Original article by Geoff Chambers, Ewin Hannan, Joyce Moullakis
The Australian – Page: 1 & 4 : 7-Mar-23

The Reserve Bank of Australia is widely tipped to announce a 10th consecutive increase in the cash rate on Tuesday, and some economists believe that there is potential for up to four rate rises by June. Westpac’s chief economist Bill Evans says households face a tough time in coming months, and they must expect more rate rises. Evans warns that it is "now or never" if the RBA is to get inflation under control, and he contends that failing to do so would risk the prospect of interest rates approaching the levels that were seen in the 1990s. ACTU secretary Sally McManus has called for a pause in interest rate rises, arguing that Australians are "seriously hurting" and the rate rises to date have achieved the RBA’s goal of running down households’ savings.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, ACTU

Workers miss out as gulf between wages and inflation widens

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Original article by Sezen Bakan
The New Daily – Page: Online : 6-Mar-23

Seek senior economist Matt Cowgill says Australia may have already seen the peak of its salary growth, with the Seek Advertised Salary Index rising by just 0.2 per cent from December to January; it was the second month in a row that growth had slowed. Real wages had their biggest fall on record in 2022, while Greg Jericho from the Australia Institute’s Centre for Future Work claims the link between company profits and wages has weakened; he contends that industrial relations policy for the last 20 years has been all about low wages growth

CORPORATES
SEEK LIMITED – ASX SEK, THE AUSTRALIA INSTITUTE LIMITED. CENTRE FOR FUTURE WORK