Reserve Bank ready to cut rates

Original article by David Rogers
The Australian – Page: 19 & 26 : 17-Apr-19

The minutes of the Reserve Bank of Australia’s monthly board meeting indicate that the central bank still expects gradual progress in lifting the inflation rate to its target range and reducing the unemployment rate. However, the minutes show that the RBA would be prepared to reduce the cash rate if inflation remains low and unemployment increases. The Australian dollar fell to a two-week low of $US0.714 in local trading in response to the release of the RBA’s minutes.

CORPORATES
RESERVE BANK OF AUSTRALIA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, JP MORGAN AUSTRALIA LIMITED

Rate cut to avoid poll date as economy becomes battleground

Original article by David Rogers
The Australian – Page: 19 & 29 : 12-Apr-19

Financial markets have priced in a 25 basis point reduction in official interest rates by October, although the chances of a rate cut during the federal election campaign are seen to be low. Meanwhile, Shane Oliver of AMP Capital says historical analysis shows that movements in global sharemarkets tend to have a bigger impact on the local bourse than the outcome of a federal election. However, he notes that Labor’s policies such as income tax and franking credit reforms may weigh on shares and the Australian dollar.

CORPORATES
AMP CAPITAL INVESTORS LIMITED, AUSTRALIAN LABOR PARTY, RESERVE BANK OF AUSTRALIA, CITIGROUP PTY LTD, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, STANDARD AND POOR’S ASX 200 INDEX

Market backs rate cuts over fiscal stimulus

Original article by Sarah Turner
The Australian Financial Review – Page: 9 : 4-Apr-19

The April 2019 Budget has not had much impact on monetary policy expectations, with financial markets still pricing in two interest rate cuts by August 2020. Sally Auld of JP Morgan says the Budget’s fiscal stimulus measures are unlikely to completely offset the impact of factors such as the downturn in housing prices, slowing construction activity and weak growth in real incomes. Meanwhile, economists are more bearish about the economic growth outlook than the Treasury.

CORPORATES
JP MORGAN AUSTRALIA LIMITED, AUSTRALIA. DEPT OF THE TREASURY, RBC CAPITAL MARKETS, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESERVE BANK OF AUSTRALIA, AUSTRALIAN LABOR PARTY

Interest rates on hold, but cuts on the cards

Original article by David Rogers
The Australian – Page: 47 : 3-Apr-19

The Reserve Bank of Australia has signalled that it remains open to monetary policy stimulus if economic conditions justify such action, while keeping the cash unchanged at 1.5 per cent for a 32nd consecutive month. Central bank governor Philip Lowe has also noted a slowdown in global economic growth and an increase in downside risks. Marcel Thieliant of Capital Economics expects official interest rates to be reduced in the near-term.

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

Economists see rates on hold this year

Original article by Sarah Turner, Vesna Poljak, William McInnes
The Australian Financial Review – Page: 14 & 21 : 1-Apr-19

The latest quarterly survey of economists shows that the general consensus is that the Reserve Bank of Australia will leave official interest rates unchanged at 1.5 per cent for the remainder of 2019. The previous quarterly survey had shown that respondents expected rates to rise to 1.75 by the end of 2019. Meanwhile, the median forecast for the unemployment rate is 5 per cent by mid-2019, compared with a median forecast of 5.20 per cent in the previous survey. Expectations for underlying inflation in mid-2019 have also been pegged back, from 2.10 per cent in the January survey to 1.80 per cent.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NOMURA AUSTRALIA LIMITED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, HSBC AUSTRALIA HOLDINGS PTY LTD, BANK OF AMERICA AUSTRALIA LIMITED, MERRILL LYNCH (AUSTRALIA) PTY LTD, MACQUARIE GROUP LIMITED – ASX MQG, CITIGROUP PTY LTD, LAMINAR CAPITAL PTY LTD, DEUTSCHE BANK AG, JP MORGAN AUSTRALIA LIMITED

Ten-year bond yields plumb new depths

Original article by Vesna Poljak
The Australian Financial Review – Page: 31 : 29-Mar-19

The global bond rally has seen the yield on Australian 10-year bonds fall to a record low of 1.73 per cent, to the same level as New Zealand’s 10-year bonds. However, NZ currently has a higher official interest rate at 1.75 per cent, although futures traders have priced in two rate cuts in Australia by August 2020, which would reduce the cash rate to one per cent. Annette Beacher of TD Securities has not ruled out a further fall in bond yields.

CORPORATES
TD SECURITIES, RESERVE BANK OF AUSTRALIA, RESERVE BANK OF NEW ZEALAND, EUROPEAN CENTRAL BANK, UNITED STATES. FEDERAL RESERVE BOARD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Jobless fall gives RBA breathing room

Original article by Matthew Cranston
The Australian Financial Review – Page: 10 : 22-Mar-19

Australia’s official unemployment rate fell from five per cent to 4.9 per cent in February, with a net gain of 4,600 jobs for the month. The economy shed 7,300 full-time jobs in February, although this was offset by the creation of 11,900 part-time positions. The participation rate and the underutilisation rate both eased slightly, to 65.6 per cent and 13.1 per cent respectively. Economists say the unemployment rate’s fall to an eight-year low will reduce pressure on the Reserve Bank to cut official interest rates.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN BUREAU OF STATISTICS, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, HSBC AUSTRALIA HOLDINGS PTY LTD, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, UNIVERSITY OF MELBOURNE. INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH, SEEK LIMITED – ASX SEK

Hold on rates due to strong jobs data

Original article by David Uren
The Australian – Page: 2 : 20-Mar-19

The minutes of the Reserve Bank’s monthly board meeting show that the central bank expects the labour market to remain strong, negating the need for any change to the cash rate in the near-term. The Reserve Bank also maintained its guidance for GDP growth of about three per cent in 2019, although the board meeting was held the day before the release of data showing GDP growth of just 0.2 per cent for the December 2018 quarter.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN BUREAU OF STATISTICS

Cash rate could fall below 1pc, UBS says

Original article by David Rogers
The Australian – Page: 28 : 19-Mar-19

George Tharenou of UBS says the Reserve Bank of Australia should immediately reduce the cash rate by 50 basis points to one per cent, given the state of the economy and the housing market. Tharenou adds that the central bank should also signal that it is prepared to cut official interest rates even further in order to avoid a market shock later on. He has also not ruled out measures such as quantitative easing. Tharenou expects rate cuts in July and August, although he says weak labour market data could force its hand earlier.

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

ANZ ditches forecast for RBA rate increases

Original article by David Rogers
The Australian – Page: 21 : 14-Mar-19

The ANZ Bank has scaled back its expectations for official interest rate rises in the near-term, forecasting that the cash rate will remain at 1.5 per cent until 2021. ANZ had previously expected two increases in the cash rate during 2020. ANZ’s David Plank says economic indicators other than GDP growth need to be taken into account when forecasting monetary policy, including labour market data. He adds that the Reserve Bank could act quickly to reduce the cash rate if signs of weakness in the labour market emerge.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, RESERVE BANK HEALTH SOCIETY LIMITED, WESTPAC BANKING CORPORATION – ASX WBC