INTEREST RATES – AUSTRALIA

RBA hits pause, for now

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 4 : 5-Apr-23

Reserve Bank of Australia governor Philip Lowe has emphasised that the interest rate pause on Tuesday does not necessarily mean that the cash rate has peaked. He says the decision to leave rates on hold at 3.6 per cent in April will give the RBA board more time to assess the state of the economy and the outlook. Lowe added that further tightening of monetary policy may be needed to restore inflation to the target range of 2-3 per cent. Financial markets have now priced in a 22 per cent chance of a rate rise in May, compared with 40 per cent prior to the monthly board meeting. Economists say that inflation data for the March quarter will be a key factor in the RBA’s interest rates decision in May.

CORPORATES
RESERVE BANK OF AUSTRALIA

RBA signals rates pause amid warning on woeful productivity

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Original article by Tom Dusevic
The Australian – Page: 1 & 4 : 22-Mar-23

The minutes from the Reserve Bank of Australia’s board meeting on 7 March show that it may be open to leaving the cash rate on hold in April. The minutes note that RBA board members agreed to reconsider the case for a pause at the April meeting, as this would provide it with additional time to reassess the outlook for the economy. The board also noted that a rate pause will be appropriate at some point in order to more fully assess the effect of the 10 consecutive interest rate increases to date. The minutes show that the RBA board is also concerned about Australia’s low level of productivity and its impact on inflation.

CORPORATES
RESERVE BANK OF AUSTRALIA

RBA ‘will do what’s necessary’, but end of rate rises in sight

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Original article by Patrick Commins
The Australian – Page: 1 & 2 : 8-Mar-23

Reserve Bank of Australia governor Philip Lowe adopted a more dovish tone on Tuesday following the latest 25 basis point increase in the cash rate, to 3.6 per cent. He said the RBA board expects that further tightening of monetary policy will be needed to ensure that inflation returns to the target range of 2-3 per cent. He added that the board is of the view that the current period of high inflation will be temporary. Lowe had stated after the RBA’s February board meeting that "further increases in interest rates will be needed over the months ahead". Josh Williamson of Citigroup says this change in tone suggests that the end of rate rises is in sight, and there could potentially be just one more in the current monetary policy tightening cycle. The cash rate is now at its highest level since May 2012.

CORPORATES
RESERVE BANK OF AUSTRALIA, CITIGROUP PTY LTD

Inflation: Act now or hurt like 1990s

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Original article by Geoff Chambers, Ewin Hannan, Joyce Moullakis
The Australian – Page: 1 & 4 : 7-Mar-23

The Reserve Bank of Australia is widely tipped to announce a 10th consecutive increase in the cash rate on Tuesday, and some economists believe that there is potential for up to four rate rises by June. Westpac’s chief economist Bill Evans says households face a tough time in coming months, and they must expect more rate rises. Evans warns that it is "now or never" if the RBA is to get inflation under control, and he contends that failing to do so would risk the prospect of interest rates approaching the levels that were seen in the 1990s. ACTU secretary Sally McManus has called for a pause in interest rate rises, arguing that Australians are "seriously hurting" and the rate rises to date have achieved the RBA’s goal of running down households’ savings.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, ACTU

RBA forecast to lift rate for 10th straight time

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Original article by Cecile Lefort
The Australian Financial Review – Page: 23 : 6-Mar-23

Futures pricing suggests that Australian equities will gain 0.9 per cent when the market opens on Monday. The local bourse is expected to be bolstered by a positive lead from Wall Street, which rallied in response to the latest US economic data. Meanwhile, financial markets have priced in a 96 per cent chance that the Reserve Bank of Australia will increase the cash rate by 25 basis points to 3.6 per cent on Tuesday. However, most economists now expect the cash rate to peak at 3.85 per cent in the June quarter.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, RESERVE BANK OF AUSTRALIA

RBA’s rate rises to run for months

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Original article by Patrick Commins
The Australian – Page: 1 & 4 : 8-Feb-23

Reserve Bank of Australia governor Philip Lowe has signalled that further official interest rate increases are likely in order to bring inflation under control. The RBA increased the cash rate by 25 basis points to 3.35 per cent on Tuesday, in a move that was widely expected. Many economists now forecast that the cash rate will peak at 3.85 per cent in April, compared with previous expectations of 3.6 per cent. Lowe has emphasised that the RBA will do "what is necessary" to return inflation to its target range of 2-3 per cent. Lowe has conceded that the RBA’s preferred measure of underlying inflation is higher than expected at 6.9 per cent. Meanwhile, new data shows that Australia’s trade surplus fell to $12.2bn in December.

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RESERVE BANK OF AUSTRALIA

Retail slump won’t stop RBA rate rise

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Original article by Ronald Mizen
The Australian Financial Review – Page: 1 & 4 : 1-Feb-23

Data from the Australian Bureau of Statistics shows that retail sales fell by 3.9 per cent in December. This followed 11 consecutive months of growth. Monthly sales fell by $1.4bn to $34.4bn in seasonally adjusted terms in December. Treasurer Jim Chalmers says the downturn in retail sales reflects the impact of rising interest rates on household budgets. However, some economists have downplayed the significance of the latest retail data, arguing that the Black Friday sales in late November affected the seasonally-adjusted figures. The Reserve Bank is still widely tipped to increase the cash rate by 25 basis points in February.

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

Australia’s softening inflation unlikely to spell an end to interest rate hikes

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Original article by Peter Hannam
The Guardian Australia – Page: Online : 25-Jan-23

The Australian Bureau of Statistics will release inflation data for the December quarter on Wednesday. Many economists expect the annual headline inflation rate to have peaked at 7.5 per cent in the quarter, compared with 7.3 per cent in the previous three months. The trimmed mean is the Reserve Bank of Australia’s preferred measure of inflation; the general consensus of economists is that this will be 6.4 per cent in the December quarter, compared with 6.1 per cent in the previous quarter. However, the ANZ Bank expects a headline inflation rate of 7.7 per cent and a trimmed mean of 6.7 per cent. The bank contends that the RBA is likely to increase the cash rate three times by May, given that both measures will still be well above its target range of 2-3 per cent.

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

Chalmers asks ACCC to probe deposit rates

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Original article by Ayesha de Kretser
The Australian Financial Review – Page: 12 & 15 : 11-Jan-23

Treasurer Jim Chalmers says consumers with savings accounts should consider switching banks to get a better deal, given that some banks still have low deposit interest rates despite eight increases in the cash rate during 2022. Chalmers contends that banks should treat their customers fairly with regard to savings accounts, and he has asked the Australian Competition & Consumer Commission to examine this issue in 2023. Analysis shows that smaller banks generally have much more competitive interest rates on deposit accounts than the nation’s four major banks.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

RBA’s rapid rate rises questioned by parliament

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Original article by Ronald Mizen
The Australian Financial Review – Page: Online : 23-Dec-22

The House of Representatives’ economics committee has been reviewing the Reserve Bank of Australia, with its report being issued on 22 December. The committee has noted that the RBA is not solely responsible for bringing down inflation, with the committee observing that community and business expectations about inflation also have an influence; the committee stated the RBA needs to take these expectation into account both when setting interest rates and when signalling its monetary policy intentions. The committee stated it expects the RBA to analyse where demand inflation is strongest and what impact interest rate rises were having.

CORPORATES
AUSTRALIA. HOUSE OF REPRESENTATIVES STANDING COMMITTEE ON ECONOMICS, RESERVE BANK OF AUSTRALIA