Rate cut odds sink with jobless fall

Original article by Adam Creighton
The Australian – Page: 2 : 24-Jan-20

Official data shows that Australia’s unemployment rate fell to 5.1 per cent in December, its lowest level since April. The economy shed 300 full-time jobs, although this was offset by the creation of 29,200 part-time jobs. The underemployment rate was steady at 8.3 per cent; the Australian Bureau of Statistics’ chief economist Bruce Hockman notes that underemployment has remained unchanged over the last year. Financial markets have responded to the latest jobs data by pricing in a 25 per cent chance that the Reserve Bank will reduce the cash rate in February.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, RESERVE BANK OF AUSTRALIA

Rate cuts not working says CBA economist

Original article by Sarah Turner
The Australian Financial Review – Page: 27 : 22-Jan-20

National Australia Bank’s chief economist Alan Oster says the Reserve Bank needs to reduce official interest rates twice in 2020 in order to stimulate the economy. He expects the first rate cut to be in February. The Commonwealth Bank’s chief economist Michael Blythe also anticipates a rate cut in February, although he opposes such a move. Blythe contends that the three rate cuts in 2019 have not been effective, and they have resulted in outcomes such as a decline in consumer confidence.

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

Pundits expect rate cut despite jobs positivity

Original article by Matthew Cranston
The Australian Financial Review – Page: 3 : 9-Jan-20

Data from the Australian Bureau of Statistics shows that there was 1.6 per cent growth in job vacancies in the November quarter, in seasonally adjusted terms. Private sector job vacancies increased by 1.5 per cent, after declining in the two previous quarters. The figures also show that the number of available jobs rose to 239,400 in the year to November, compared with 235,100 in August. However, economics still expect the Reserve Bank of Australia to reduce the cash rate in February.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, RESERVE BANK OF AUSTRALIA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH SECURITIES LIMITED

Rate cut odds shorten as bushfires hit economy

Original article by Adam Creighton
The Australian – Page: 14 : 9-Jan-20

The prospect of an official interest rate cut in February has increased from 38 per cent to almost 60 per cent in the wake of the bushfires crisis. Katrina Ell of Moody’s Analytics says the odds of a rate cut had already been high, while she warns that agriculture, tourism, household spending and productivity are likely to be particularly hard hit by the disaster. Meanwhile, Capital Economics’ analysis suggests that a sharp fall in tourist numbers and farm production could reduce economic growth by about 0.1 per cent in the March quarter.

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MOODY’S ANALYTICS AUSTRALIA PTY LTD, CAPITAL ECONOMICS LIMITED, RESERVE BANK OF AUSTRALIA, GOLDMAN SACHS AUSTRALIA PTY LTD, CITIGROUP PTY LTD

Australia’s economic interests at risk with RBA out of ammunition

Original article by John Kehoe
The Australian Financial Review – Page: 2 : 21-Dec-19

Paul Brennan of Citigroup notes that the Reserve Bank of Australia’s average cumulative interest rate cut in the last four monetary policy easing cycles was three percentage points. With the cash rate already at a record low of 0.75 following three rate cuts since June, experts warn that the RBA has limited ‘firepower’ in the event of an economic downturn. RBA governor Philip Lowe has ruled out negative interest rates; while he is open to quantitative easing, his preference is for fiscal stimulus and structural reform.

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RESERVE BANK OF AUSTRALIA, CITIGROUP PTY LTD, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE TREASURY

Jobs surge slashes RBA rate cut odds

Original article by Sarah Turner
The Australian Financial Review – Page: 2 : 20-Dec-19

The financial market’s expectations of an official interest rate cut in February have been reduced from 56.8 per cent to just 45.2 per cent, following the release of the latest jobs data. The Australian Bureau of Statistics has reported that 39,900 jobs were created in November, well above economists’ forecasts of 15,000. The unemployment rate eased from 5.3 per cent to 5.2 per cent, with 4,200 full-time and 35,700 part-time jobs being created during the month. The participation rate was steady at 66 per cent.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, AUSTRALIA. DEPT OF THE TREASURY

RBA to wait and see before February rate cut

Original article by David Rogers
The Australian – Page: 18 : 18-Dec-19

Financial markets have priced in a 62 per cent of an official interest rate cut in February, following the release of the federal government’s Mid-Year Economic and Fiscal Outlook. The minutes from the central bank’s latest board meeting indicate that it will assess the economic outlook before deciding whether to make any change to monetary policy at its first meeting for 2020. The minutes noted that some downside risks to the global economic outlook have receded in recent weeks.

CORPORATES
RESERVE BANK OF AUSTRALIA

RBA chief has confidence in consumers

Original article by David Rogers, James Glynn
The Australian – Page: 23 : 11-Dec-19

George Tharenou of UBS says the Reserve Bank of Australia is likely to reduce the cash rate twice in the first half of 2020, to a record low of 0.25 per cent. He adds that the federal government’s mid-year Budget update is unlikely to include any "material" fiscal stimulus. Meanwhile, RBA governor Philip Lowe concedes that it is taking longer than usual for consumers to spend the extra cash from the three interest rate cuts in 2019 and the federal government’s income tax offset. However, he expects consumer spending to increase.

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD

Low interest rates aren’t enough to boost wages growth: Economists

Original article by Euan Black
The New Daily – Page: Online : 4-Dec-19

With official interest rates left unchanged at 0.75 per cent on 3 December, some economists contend that further rate cuts are necessary for the Reserve Bank to deliver on its employment and inflation targets. However, others argue that interest rates are already so low that further cuts will not do not much to stimulate the economy. Instead, they contend that wage increases are needed, and this in turn requires measures to boost labour productivity. Growth in productivity has averaged 1.1 per cent annually over the last five years, and Treasurer Josh Frydenberg has estimated that lifting it to 1.5 per cent would boost incomes by $3,000 a year.

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

Economists push out QE timing after Lowe speech

Original article by Matthew Cranston
The Australian Financial Review – Page: 8 : 28-Nov-19

Westpac’s chief economist Bill Evans now expects the Reserve Bank of Australia to pursue quantitative easing in June 2020, having previously forecast that it would commence a bond-buying program in February. Other economists have also revised their timetables for QE after RBA governor Philip Lowe signalled that this option is unlikely to be pursued unless the cash rate falls to 0.25 per cent. Citigroup’s Josh Williamson has ruled out any move to QE in 2020.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, CITIGROUP PTY LTD, HSBC AUSTRALIA HOLDINGS PTY LTD