INFLATION (FINANCE) – AUSTRALIA

RBA sticks to its guns: no rate cut before 2025

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Original article by Joe Kelly
The Australian – Page: 4 : 21-Aug-24

The minutes from the Reserve Bank of Australia’s two-day board meeting in eatly August show that it considered increasing the cash rate to 4.6 per cent. The minutes have also reinforced expectations that the central bank will not reduce the cash rate in 2024, with the board concluding that restoring inflation to the mid-point of its 2-3 per cent target range would be delayed until 2027 if official interest rates were cut to 4.1 per cent in the near-term.

CORPORATES
RESERVE BANK OF AUSTRALIA

Business warning on public sector pay surge

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Original article by Greg Brown, Jack Quail
The Australian – Page: 1 & 4 : 14-Aug-24

Data from the Australian Bureau of Statistics shows that overall wages growth was steady at 4.1 per cent in the year to June. Public sector wages increased by 3.9 per cent in the 12 months to June, compared with 3.1 per cent a year earlier; private sector wage growth was 4.1 per cent, up from 3.9 per cent in the previous 12 months. Meanwhile, public sector wages increased by 0.9 per cent in the June quarter, compared with 0.7 per cent growth for private sector wages. Australian Industry Group CEO Innes Willox has expressed concern that public sector wages are rising at a time when private companies are trying to moderate wages growth to reduce inflationary pressures.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, THE AUSTRALIAN INDUSTRY GROUP

No rate cuts before Christmas

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 4 : 7-Aug-24

The Reserve Bank of Australia’s governor Michele Bullock says it gave "very serious consideration" to increasing the cash rate on Tuesday. However, the RBA’s board was of the view that the benefits of leaving official interest rates at 4.35 per cent outweighed the risk to the job market of an increase. Bullock emphasised that recent financial market volatility did not influence the monetary policy decision, contending that Monday’s sharemarket rout was an "overreaction" to one poor jobs report in the US. She also indicated that the RBA now expects interest rates to remain on hold until at least the end of 2024. Meanwhile, the RBA has advised that inflation is unlikely to return sustainably to its target range of 2-3 per cent before late 2026.

CORPORATES
RESERVE BANK OF AUSTRALIA

ANZ-Roy Morgan Inflation Expectations up marginally in late July at 5.0% – from 4.9% for the month of June

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Original article by Roy Morgan
Market Research Update – Page: Online : 31-Jul-24

The latest weekly ANZ-Roy Morgan Inflation Expectations are 5.0% for the week of July 22-28. This figure is in line with the average so far this year of 5.0%, and up 0.1% points from the month of June. A look at monthly Inflation Expectations for June 2024 shows the measure at 4.9% for the month – unchanged on a month earlier and the equal lowest monthly figure so far this year. Looking back over the first six months 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 6,033 Australians aged 14+ in June 2024.

CORPORATES
ROY MORGAN LIMITED, AUSTRALIAN BUREAU OF STATISTICS

Traders gird for dangerous 48 hours

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Original article by Sarah Jones
The Australian Financial Review – Page: 27 : 31-Jul-24

Bond market pricing suggests that there is about a 20 per cent chance that the Reserve Bank of Australia will increase the cash rate in August. The chances of a rate rise in September are now 31 per cent. Quarterly CPI data to be released on Wednesday is likely to be a key factor in the RBA’s monetary policy decision; the central bank’s preferred measure of trimmed mean inflation is tipped to ease from one per cent to 0.9 per cent. Investors will also be keenly awaiting the outcome of the US Federal Reserve’s two-day policy meeting, and signs that rate cuts are on its agenda in coming months.

CORPORATES
RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD

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