INFLATION (FINANCE) – AUSTRALIA

Inflation may drop below 3pc by July

roymorgansocial Leave a comment

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

roymorgansocial Leave a comment

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

roymorgansocial Leave a comment

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

roymorgansocial Leave a comment

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

roymorgansocial Leave a comment

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

Chalmers to fight inflation, then spend

roymorgansocial Leave a comment

Original article by Ronald Mizen
The Australian Financial Review – Page: 1 & 4 : 7-May-24

The federal government’s budget on 14 May will show that Australia’s gross debt has risen to $904bn in 2023-24; this is about $152bn lower than was forecast ahead of the 2022 federal election. However, the nation’s debt-to-GDP ratio is expected to rise from 33.7 per cent in the current financial year to 35.1 per cent by 2025-26. Meanwhile, Treasurer Jim Chalmers has signalled that combating inflation will be the key focus of the 2024 budget, while he has flagged an increase in government spending over the forward estimates period.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY

Chalmers to fight inflation, then spend

roymorgansocial Leave a comment

Original article by Ronald Mizen
The Australian Financial Review – Page: 1 & 4 : 7-May-24

The federal government’s budget on 14 May will show that Australia’s gross debt has risen to $904bn in 2023-24; this is about $152bn lower than was forecast ahead of the 2022 federal election. However, the nation’s debt-to-GDP ratio is expected to rise from 33.7 per cent in the current financial year to 35.1 per cent by 2025-26. Meanwhile, Treasurer Jim Chalmers has signalled that combating inflation will be the key focus of the 2024 budget, while he has flagged an increase in government spending over the forward estimates period.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY

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

roymorgansocial Leave a comment

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

Inflation means tax cuts could pose a risk

roymorgansocial Leave a comment

Original article by Sarah Ison, Lydia Lynch
The Australian – Page: 6 : 26-Apr-24

AMP’s chief economist Shane Oliver says the higher-than-expected inflation data for the March quarter means the revised stage-three income tax cuts present a greater economic risk than when they were first announced. He contends that the tax cuts to be announced in the 14 May budget would have been less of a risk to the economy if inflation had been falling. Veteran economist Chris Richardson notes that it has been known for a long time that the tax cuts will be inflationary. Consumer prices rose by one per cent in the March quarter; this compares with economists’ expectations of 0.8 per cent growth, and the 0.6 per cent increase in the December quarter.

CORPORATES
AMP LIMITED – ASX AMP

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

roymorgansocial Leave a comment

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