Reserve Bank cools expectations of rise in interest rates

Original article by David Rogers
The Australian – Page: 13 & 20 : 9-Jul-21

Reserve Bank of Australia governor Philip Lowe has downplayed speculation that it could begin tightening monetary policy in 2022. Lowe has told the Economics Society of Queensland that inflation must be "sustainably" within the RBA’s target range of 2-3 per cent before it will consider a rise in the official interest rate; he added that wage growth of at least three per cent is likely to be needed for inflation to reach the central bank’s target range, while wages growth is "materially" less than three per cent at present. George Tharenou of UBS expects the RBA to abandon its bond yield target in the second half of 2022, which would enable it to increase the cash rate in 2023.

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD

Investors bring forward rate rise expectations

Original article by William McInnes
The Australian Financial Review – Page: 25 : 7-Jul-21

Marcel Thieliant of Capital Economics now expects the Reserve Bank of Australia to begin tightening monetary policy in early 2023, and he has flagged a cash rate of 0.75 per cent by the end of that year. RBA governor Philip Lowe has previously reiterated that interest rates are likely to remain at 0.1 per cent until at least 2024, but he indicated in a statement on 6 July that this is now merely its "central scenario" and the conditions that could justify a rate rise could be met earlier than this. Interest rate futures pricing also suggests that the cash rate could begin rising earlier than expected.

CORPORATES
CAPITAL ECONOMICS LIMITED, RESERVE BANK OF AUSTRALIA

RBA lauds $50bn budget boost

Original article by Patrick Commins
The Australian – Page: 1 & 4 : 21-Apr-21

The federal government had forecast a $198bn Budget deficit for 2020-21 in its mid-year economic and financial outlook. The Department of Finance has advised that the Budget bottom line improved by $23bn during the first eight months of the financial year; some economists now expect the full-year deficit to be about $50bn lower than had been forecast in December. Meanwhile, the Reserve Bank of Australia says the strong economic rebound has seen national GDP growth return to its pre-pandemic level. The RBA reiterated in the minutes of its monthly board meeting that the cash rate is likely to remain on hold until at least 2024.

CORPORATES
AUSTRALIA. DEPT OF FINANCE, RESERVE BANK OF AUSTRALIA

CBA faces penalty over rates slug

Original article by Joyce Moullakis, David Ross
The Australian Financial Review – Page: 16 : 2-Dec-20

The Australian Securities & Investments Commission has launched legal action against the Commonwealth Bank of Australia over allegations that it breached financial services laws. ASIC contends that customers with business overdraft accounts were charged incorrect interest rates between December 2014 and March 2018. CBA has advised that 2,269 customers who were overcharged during this period have been reimbursed $3.74m in total. ASIC is seeking pecuniary penalties and other orders.

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

Banks defiant on mortgage rates

Original article by Joyce Moullakis, Lachlan Moffet Gray
The Australian – Page: 17 & 21 : 5-Nov-20

Australia’s four largest banks will keep their variable home loan interest rates unchanged, despite the Reserve Bank’s decision to reduce the cash rate to a record low of 0.1 per cent. However, the "big four" banks will all reduce their fixed home loan interest rates, with some falling below two per cent for the first time. The majority of mortgage loans across the Australian financial sector have variable rates, although more borrowers are opting for fixed-rate loans in the low-interest rate environment.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Retirees hit but ‘it’s for the good of all’

Original article by Patrick Commins
The Australian – Page: 4 : 4-Nov-20

Reserve Bank governor Philip Lowe has conceded that retirees and savers will be hard hit by the decision to reduce the cash rate to a record low of 0.1 per cent. However, Lowe contends that they need to be mindful of the "collective good", arguing that lower rates will benefit the broader community by supporting spending and creating jobs. Rice Warner’s executive director Michael Rice notes that retirees who are only partly self-funded will be particularly hard hit by the decline in deposit rates, and many will become more reliant on the age pension.

CORPORATES
RESERVE BANK OF AUSTRALIA, RICE WARNER ACTUARIES PTY LTD

RBA’s shot in zero-sum rates game

Original article by Patrick Commins
The Australian – Page: 1 & 4 : 4-Nov-20

Reserve Bank of Australia governor Philip Lowe has flagged the use of "additional monetary policy options" if necessary, after reducing the cash rate to a record low and announcing a quantitative easing program. Lowe has indicated that the cash rate will remain at 0.1 per cent for 3-5 years, while the RBA’s three-year bond rate target has also been reduced to 0.1 per cent. Meanwhile, former RBA board member John Edwards has hailed the "courageous" and "historic" decision to pursue quantitative easing. The central bank will purchase about $5bn worth of federal and state government bonds each week over the next six months.

CORPORATES
RESERVE BANK OF AUSTRALIA

RBA lays ground for Cup Day cut

Original article by David Rogers, Patrick Commins
The Australian – Page: 13 & 20 : 16-Oct-20

Expectations of an official interest rate cut in November have been heightened by comments made by Reserve Bank of Australia governor Philip Lowe. He has told the Citi Investment conference that further easing of monetary policy is likely to "get more traction" as the economy re-opens than it would have at the COVID-19 pandemic’s peak. Kristina Clifton of the Commonwealth Bank says the RBA is likely to reduce the cash rate from 0.25 per cent to 0.1 per cent in November, and expand its bond-buying program to include five and 10-year government bonds.

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

Shock and awe budget rate cut to cushion bumpy recovery

Original article by Patrick Commins
The Australian – Page: 1 & 4 : 23-Sep-20

The Reserve Bank of Australia’s deputy governor Guy Debelle has signalled that there could be a further reduction in the cash rate, which fell to a record low of 0.25 per cent in March. The next scheduled meeting of the central bank’s board is on 6 October, when the federal government will also hand down the Budget. National Australia Bank’s chief economist Alan Oster says the cash rate is likely to be reduced to 0.1 per cent on this day or in November. He adds that further cutting the cash rate may not do much to stimulate the economy or create jobs,

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

Savings rates are drying up as banks race to the bottom on mortgages

Original article by Matt Johnson
The New Daily – Page: Online : 3-Jun-20

Data from Canstar shows that Australian banks reduced the interest rates on a range of savings accounts and term deposits by up to 75 basis points in May. However, the interest rates on mortgage loans were reduced much less aggressively, averaging just 0.08 per cent for variable home loans and 0.36 per cent for fixed-rate loans. Steve Mickenbecker of Canstar attributes this to factors such as growing competition from non-bank mortgage lenders. However, he does not expect rates to fall much further.

CORPORATES
CANSTAR PTY LTD