INFLATION (FINANCE) – AUSTRALIA

Bullock acts on stubborn price rises

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 8 : 8-Nov-23

Reserve Bank of Australia governor Michele Bullock says that slower than expected progress in reducing inflation had prompted the board’s decision to increase the cash rate to 4.35 per cent on Tuesday. Bullock also indicated that economic data and the evolving assessment of risks will determine whether further tightening of monetary policy will be required to ensure that inflation returns to the RBA’s target range of 2-3 per cent in a reasonable timeframe. Financial markets have priced in a seven per cent chance of a rate rise in December, and a 36 per cent chance of another increase in February 2024.

CORPORATES
RESERVE BANK OF AUSTRALIA

IMF calls on RBA to raise rates

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Original article by John Kehoe
The Australian Financial Review – Page: 1 & 4 : 2-Nov-23

The International Monetary Fund now believes that Australia’s inflation rate will not return to the Reserve Bank’s target range of 2-3 per cent until early 2026. The central bank itself expects inflation to return to the upper limit of its target band by late 2025. Abdoul Wane, the IMF’s mission chief to Australia, notes that although the inflation rate is gradually declining, further interest rate increases are needed in order to bring inflation under control more quickly. Wane also contends that the federal and state governments should defer some infrastructure projects in order to alleviate inflationary pressures.

CORPORATES
INTERNATIONAL MONETARY FUND, RESERVE BANK OF AUSTRALIA

Inflation Expectations in mid-October at 5.7% – significantly higher than in September (5.2%)

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Original article by Roy Morgan
Market Research Update – Page: Online : 25-Oct-23

The latest weekly Inflation Expectations are at 5.7% for the week of October 16-22 – up 0.4% points from a week ago. This is the highest weekly Inflation Expectations have been since the first week of July. However, a look at the monthly Inflation Expectations for September shows that the measure was down 0.2% points to 5.2%. In the month of September, Australians expected inflation of 5.2% annually over the next two years. This decline in Inflation Expectations in the month of September is important given that the monthly ABS CPI estimate for September is set to be released on Wednesday. The ABS monthly CPI estimate for August was 5.2%, up 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 6,025 Australians aged 14+ in September 2023.

CORPORATES
ROY MORGAN LIMITED, AUSTRALIAN BUREAU OF STATISTICS

Reserve will not hesitate to hike

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Original article by Patrick Commins
The Australian – Page: 1 : 25-Oct-23

Reserve Bank of Australia governor Michele Bullock has used her first public speech in the role to emphasise that the central bank will increase the cash rate again if it is deemed necessary in order to curb inflation. Bullock conceded that there is a risk that inflation could return to the RBA’s target range more slowly than is currently forecast. Meanwhile, Treasurer Jim Chalmers says inflation is likely to remain higher and for longer than the government would like; however, he says Australia is in a position of relative strength due to the foundations the government has laid in the last 12 months. CPI data to be released on Wednesday is likely to be a key factor in the RBA’s monetary policy decision on 7 November.

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

Odds of Melbourne Cup Day rate rise shorten

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Original article by Shane Wright, Rachel Clun
The Age – Page: Online : 18-Oct-23

The minutes of the Reserve Bank of Australia’s board meeting for October show that it considered increasing the cash rate. The minutes stated that the RBA board has a low tolerance for a slower return of inflation to the target range than currently expected, and that upcoming economic data will determine whether the current monetary pause is sustained. Inflation and unemployment data to be released next week are likely to be a key factor as to whether the cash rate is increased in November. Meanwhile, Deloitte Access Economics has forecast that economic growth will slow to one per cent by the March 2024 quarter, and that the nation will experience both a per capita recession and a recession in the retail sector.

CORPORATES
RESERVE BANK OF AUSTRALIA, DELOITTE ACCESS ECONOMICS PTY LTD

Inflation Expectations dropped to 5.4% for the month of August – and have now fallen to 4.9% in mid-September

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

In August 2023, Australians expected inflation of 5.4% annually over the next two years, down 0.2% points from July. This is also down 0.2% points from a year ago in August 2022 (5.6%) and in line with the monthly average so far this year of 5.4%. The latest weekly Inflation Expectations are now at 4.9% in mid-September – the lowest weekly Inflation Expectations for 18 months since early February 2022, before Russia invaded Ukraine. The softening in Inflation Expectations in recent weeks suggest that the RBA’s decision to leave interest rates unchanged at its last three board meetings may be the correct decision, but there are still significant pressures in the economy. 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 August.

CORPORATES
ROY MORGAN LIMITED, AUSTRALIAN BUREAU OF STATISTICS

Nation stuck on grow slow: OECD

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Original article by Tom Dusevic
The Australian – Page: 1 & 4 : 20-Sep-23

The OECD still expects Australia to record GDP growth of 1.8 per cent in 2023, in line with its previous forecast. However, GDP growth is expected to be just 1.3 per cent in 2024. The OECD has also forecast that Australia’s headline inflation rate will fall to 3.2 per cent in 2024, down from 5.5 per cent in 2023. However, the Reserve Bank of Australia’s preferred measure of core inflation is forecast to rise to 5.9 per cent in 2023 before falling to 3.3 per cent next year. Meanwhile, the minutes from the RBA’s monthly board meeting shows that board members considered lifting the cash rate to 4.35 per cent in September, due to concerns about inflation

CORPORATES
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, RESERVE BANK OF AUSTRALIA

July monthly Inflation Expectations were unchanged at 5.6% – but have now dropped to 5.2% in mid-August

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Original article by Roy Morgan
Market Research Update – Page: Online : 16-Aug-23

In July 2023, Australians expected inflation of 5.6% annually over the next two years, unchanged from June. This also matches the Inflation Expectations of four months ago in March 2023, but is down 0.3% points from a year ago in July 2022 (5.9%). Although Inflation Expectations have been stable over the last few months they have fallen during the early weeks of August. The latest weekly Inflation Expectations are now at 5.2% in mid-August, down for two consecutive weeks since late July – the first consecutive weekly drops in the measure since late April. The softening in Inflation Expectations in recent weeks suggest that the Reserve Bank’s decision to leave interest rates unchanged in July and August may be the correct decision; however, there are still significant pressures in the economy. 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 5,968 Australians aged 14+ in July.

CORPORATES
ROY MORGAN LIMITED, AUSTRALIAN BUREAU OF STATISTICS

Lowe: we are on way to taming inflation

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Original article by Patrick Commins
The Australian – Page: 1 & 4 : 2-Aug-23

Treasurer Jim Chalmers says the Reserve Bank of Australia’s decision to leave the cash rate unchanged at 4.1 per cent on Tuesday will be a "welcome reprieve" for people who are "doing it tough". He adds that while inflation is falling, it is still too high. RBA governor Philip Lowe has also acknowledged that consumer price growth remains too high, but says the recent data is consistent with inflation returning to the target range of 2-3 per cent over time. Lowe adds that a second successive pause will give the RBA more time to assess the impact of the rate rises to date, as well as the economic outlook.

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

Rate hikes may cost even more jobs: RBA

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Original article by Patrick Commins
The Australian – Page: 2 : 19-Jul-23

The minutes of the Reserve Bank of Australia’s board meeting for July show that it considered a 25 basis point increase in the cash rate. The board also discussed the possibility that growing pressure on households’ budgets could result in consumption slowing more sharply than the current forecasts suggest. This would in turn result in slower demand for labour, while the unemployment rate would most likely rise beyond the rate required to ensure that inflation returns to the target range of 2-3 in a timely manner. National Australia Bank’s senior economist Adam Boynton expects interest rates to remain on hold, although he says a rate rise in August is still a possibility.

CORPORATES
RESERVE BANK OF AUSTRALIA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB