INFLATION (FINANCE) – AUSTRALIA

Jobless rate fears halt RBA rate increases

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Original article by Patrick Commins
The Australian – Page: 2 : 20-Dec-23

The minutes of the Reserve Bank of Australia’s board meeting for December show that it considered whether to increase the cash rate for a second successive month. The board noted the possibility that the unemployment rate could rise higher than originally anticipated due to the central bank’s push to rein in the inflation rate. The board reiterated that it will do whatever is necessary to return inflation to its target range within a reasonable timeframe. Gareth Aird from the Commonwealth Bank expects three official interest rate cuts in 2024, beginning in September.

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RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Inflation Expectations in mid-December are at 5.3% – slightly down from the month of November (5.4%)

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Original article by Roy Morgan
Market Research Update – Page: Online : 20-Dec-23

The latest ANZ-Roy Morgan weekly Inflation Expectations are at 5.3% for the week of December 11-17, which is in line with the four-week average of 5.3% and 0.1% points lower than the month of November. A look at the monthly Inflation Expectations for November shows the measure at 5.4% for the month, an increase of 0.1% points on October (5.3%). Inflation Expectations are following a similar trend as the broader official ABS inflation measure. The lower-than-expected inflation reading for October prompted the RBA to leave interest rates unchanged at their final meeting for the year in early December. A leading factor driving the decrease in Inflation Expectations in recent weeks has been the decline in the retail petrol price. The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source which has interviewed an average of around 5,000 Australians aged 14+ per month over the last decade and includes interviews with 5,982 Australians aged 14+ in November 2023.

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ROY MORGAN LIMITED, AUSTRALIAN BUREAU OF STATISTICS

$10 billion more in spending cuts, changes aimed at inflation fight

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Original article by Shane Wright
The Sydney Morning Herald – Page: Online : 12-Dec-23

Treasurer Jim Chalmers and Finance Minister Katy Gallagher will release the mid-year budget update on Wednesday, and they are tipped to reveal that almost $10 billion in federal spending will either be cut or redirected to other areas to help fight inflation. However, the budget update will also include $5.2 billion in what the federal government has labelled ‘unavoidable’ spending, including $1.5 billion to end a special COVID-era visa program and $254 million on additional biosecurity spending, including on efforts to stop a growing incursion of imported red fire ants.

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AUSTRALIA. DEPT OF FINANCE, AUSTRALIA. DEPT OF THE TREASURY

Rates on hold, as RBA chief flags more rises

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Original article by Patrick Commins
The Australian – Page: 4 : 6-Dec-23

Reserve Bank of Australia governor Michele Bullock has reiterated that returning inflation to the target range of 2-3 per cent within a reasonable timeframe is still the RBA board’s priority. She added that the board will do whatever is necessary to achieve that outcome, raising the prospect that there may be further official interest rate increases in 2024. The RBA’s decision to leave the cash rate on hold at 4.35 per cent on Tuesday had been widely expected, after five interest rate increases during the calendar year. Treasurer Jim Chalmers has welcomed the decision, noting that Australians did not need another rate rise before Christmas. He adds that encouraging progress is being made in the fight against inflation.

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RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY

RBA poised to deliver pre-Christmas cheer to hard-pressed borrowers

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Original article by Shane Wright
The Age – Page: Online : 5-Dec-23

Financial markets and economists generally expect the Reserve Bank of Australia to leave the cash rate unchanged at 4.35 per cent on Tuesday. The central bank has increased official interest rates by 1.25 percentage points during calendar 2023, and an end-of-year pause will be welcomed by Australians with home loans. Meanwhile, data from the ANZ Bank and Indeed suggests that the series of rate rises is starting to impact on the labour market, with the number of job advertisements falling by 4.6 per cent in November. Separate data supports the view that inflation is easing; the average price of unleaded petrol recently fell to its lowest level since August.

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

RBA won’t lift rates again, says OECD

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Original article by Michael Read
The Australian Financial Review – Page: 4 : 30-Nov-23

The latest CPI data has strengthened the case for leaving Australia’s official interest rates on hold in December, with the annual inflation rate falling from 5.6 per cent in September to just 4.9 per cent in October. Meanwhile, the OECD expects the cash rate to remain on hold at 4.35 per cent until the September 2024 quarter, while the Paris-based organisation forecasts that a gradual easing of monetary policy will see it fall to 3.6 per cent by the end of 2025. Meanwhile, the OECD expects cost-of-living pressures to reduce Australia’s GDP growth from 1.9 per cent in 2023 to just 1.4 per cent in 2024. It also anticipates that inflation will fall below three per cent by 2025.

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ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

Households coping well, says Bullock

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 6 : 29-Nov-23

Reserve Bank of Australia governor Michele Bullock addressed an international conference in Hong Kong on Tuesday. She told the audience – which included a number of central bankers – that Australian households and businesses are in a "pretty good position", despite the "political noise" regarding the RBA’s 13 interest rate increases since May 2022. Bullock also conceded that the RBA’s goal of returning inflation to its target range of 2-3 per cent by the end of 2025 is "very uncertain". Her predecessor Philip Lowe told the conference that he is concerned that central banks may not yet have lifted interest rates far enough to rein in inflation.

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RESERVE BANK OF AUSTRALIA

Inflation Expectations in mid-November are at 5.6% – significantly higher than the month of October (5.3%)

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Original article by Roy Morgan
Market Research Update – Page: Online : 22-Nov-23

The latest weekly Inflation Expectations are at 5.6% for the week of November 13-20; this is up 0.1% points from a week ago and 0.3% points higher than the month of October. A look at the monthly Inflation Expectations for October shows the measure at 5.3% for the month, an increase of 0.1% points on September (5.2%). In the month of October 2023 Australians expected inflation of 5.3% annually over the next two years, and this has continued to increase since. The increase in Inflation Expectations in the month of October is important given that this is the first increase in the monthly indicator since June. The latest ABS monthly CPI estimate for September also showed an increase at 5.6%, up 0.7% points from 4.9% in the year to July. The data for the Inflation Expectations series is drawn from the Roy Morgan Single Source which has interviewed an average of around 5,000 Australians aged 14+ per month over the last decade and includes interviews with 7,495 Australians aged 14+ in October 2023.

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ROY MORGAN LIMITED, AUSTRALIAN BUREAU OF STATISTICS

Bullock: Pay growth risks higher interest rates

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 4 : 22-Nov-23

Reserve Bank of Australia governor Michele Bullock has warned that reducing the inflation rate is the "crucial challenge" facing the domestic economy over the next several years. She also said that rapidly rising labour costs are another challenge for the RBA in restoring inflation to its target range of 2-3 per cent, and stressed that the recent growth in wages will not be sustainable unless productivity improves. Recent data shows that annual wages growth reached a 14-year high of four per cent in the September quarter. Meanwhile, the minutes of the RBA’s board meeting for November show that economic data will determine whether monetary policy is further tightened. Financial markets have priced in a five per cent chance of an interest rate rise in December.

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RESERVE BANK OF AUSTRALIA

McKibbin warns of 5pc rates

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 4 : 9-Nov-23

Reserve Bank of Australia governor Michele Bullock noted on Tuesday that progress on reducing inflation has been slower than expected, which contributed to the RBA’s decision to increase official interest rates to 4.35 per cent. Treasurer Jim Chalmers says the rate increase was in the interest of the fight against inflation, while shadow finance minister Jane Hume contends that the federal government’s increase in spending since taking office in May 2022 is making the RBA’s job harder. Meanwhile, former RBA board member Warwick McKibbin argues that increases in taxes or reductions in other government spending programs are necessary to reduce demand in the economy; he adds that the RBA may need to increase the cash rate to five per cent in order to rein in the inflation rate.

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RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, LIBERAL PARTY OF AUSTRALIA