INTEREST RATES – AUSTRALIA

Optimistic Reserve Bank holds rates steady for now

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Original article by David Rogers, Patrick Commins
The Australian – Page: 19 & 27 : 6-Nov-19

Reserve Bank of Australia governor Philip Lowe has reiterated that the cash rate is likely to remain low for some time, after it was left unchanged at 0.75 per cent on 5 November. However, he also stressed that the central bank is open to further rate cuts if necessary to achieve its inflation and full employment targets. Su-Lin Ong of RBC Capital Markets now expects another rate cut in February, rather than December. Bill Evans of Westpac also expects a rate cut in February, which he says will be the last one in the current easing cycle.

CORPORATES
RESERVE BANK OF AUSTRALIA, RBC CAPITAL MARKETS, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. DEPT OF THE TREASURY

Recovery in doubt as Aussie dollar surges

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Original article by David Rogers
The Australian – Page: 17 & 27 : 1-Nov-19

The Australian dollar reached a three-month high of $US0.693 in local trading on 31 October, in the wake of the US Federal Reserve’s third interest rate cut in 2019. Financial markets have in turn downgraded the chances of the Reserve Bank of Australia reducing the cash rate again before the end of the year. The Australian dollar gained 3.3 per cent in October, including a gain of 1.6 per cent in the last five trading sessions. RBA board member Ian Harper argues that a strong currency is not desirable at present, given weak economic growth and less than full employment.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF AUSTRALIA, AMP CAPITAL INVESTORS LIMITED, MORGAN STANLEY AUSTRALIA LIMITED

CPI cools further rate cut chances

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Original article by Matthew Cranston
The Australian Financial Review – Page: 1 & 6 : 31-Oct-19

Official data shows that the consumer price index rose 0.5 per cent during the September quarter and 1.7 per cent year-on-year. Trimmed mean inflation was 0.4 per cent during the quarter and 1.6 per cent for the year to September. With the inflation rate remaining below the Reserve Bank’s target range of 2-3 per cent for a 15th consecutive quarter, the cash rate now seems likely to stay unchanged at 0.75 per cent for the rest of the year. Craig James of CommSec says the three interest rate cuts in 2019 have spooked consumers.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH SECURITIES LIMITED, CITIGROUP PTY LTD, ERNST AND YOUNG, BIS OXFORD ECONOMICS PTY LTD, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN BUREAU OF STATISTICS, AUSTRALIA. DEPT OF THE ENVIRONMENT AND ENERGY

RBA urges boards: cut hurdle rates

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Original article by Matthew Cranston
The Australian Financial Review – Page: 1 & 6 : 30-Oct-19

Reserve Bank of Australia governor Philip Lowe has used a speech in Canberra to argue that businesses should reduce their return hurdle rates on new investments in response to historically low interest rates. He contends that many business investments that did not make sense commercially when interest rates were much higher should now proceed. Lowe also emphasised that negative interest rates are unlikely in Australia.

CORPORATES
RESERVE BANK OF AUSTRALIA

No option for savers as deposits slashed

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Original article by Michael Roddan
The Australian – Page: 17 & 28 : 29-Oct-19

The Commonwealth Bank’s term deposit interest rates are now well below the official inflation rate. The banking major has cut its term deposit rates by a much higher margin than the 75-basis point reduction in the cash rate so far in 2019. InfoChoice CEO Vadim Taube says savers need to look beyond the four major banks for term deposits that offer above-inflation interest rates. Meanwhile, Liberal MP Tim Wilson says the Reserve Bank should be wary of further easing monetary policy until the impact of the recent series of official interest cuts can be determined.

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

Goode pushes for RBA rethink

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Original article by Eli Greenblat
The Australian – Page: 17 & 20 : 28-Oct-19

Former ANZ Bank chairman Charles Goode has urged Treasurer Josh Frydenberg to work with the Reserve Bank of Australia to cut its inflation target to as low as one per cent. Goode also believes that the Australian Securities & Investment Commission’s responsible lending rules are restricting lending, and he doubts that people like Frank Lowy and Harry Triguboff would have been able to establish their property businesses if the current responsible lending rules had been around in the post-World War II years. Goode says having a lower inflation target would end the RBA’s obsession with reducing interest rates to meet what he argues are outdated inflation targets.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

QE tipped as rate cuts lose impact

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Original article by David Rogers
The Australian – Page: 17 & 28 : 22-Oct-19

A number of economists now say the Reserve Bank of Australia could implement unconventional monetary policy measures in 2020. They include Westpac’s chief economist Bill Evans, who warns that quantitative easing may be necessary if the cash rate fall below 0.5 per cent. Michael Knox of Morgans Financial, Su-Lin Ong of RBC Capital Markets and Marcel Thieliant of Capital Economics have also flagged the prospect of quantitative easing. Financial markets have fully priced in a rate cut to 0.5 per cent by May.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, MORGANS FINANCIAL LIMITED, RBC CAPITAL MARKETS, CAPITAL ECONOMICS LIMITED, GOLDMAN SACHS AUSTRALIA PTY LTD

Comyn claims ACCC exaggeration but welcomes probe

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Original article by Bo Seo
The Australian Financial Review – Page: 12 & 17 : 17-Oct-19

Commonwealth Bank of Australia CEO Matt Comyn and chair Catherine Livingstone are supportive of a new inquiry into mortgage pricing. However, Comyn has questioned the Australian Competition & Consumer Commission’s claim that the pricing gap for new and existing customers of the nation’s major banks is 32 basis points. He says this gap is significantly lower than 30 basis points at CBA. Livingstone notes that the bank takes into account the interests of borrowers, deposit-holders and shareholders when deciding upon its mortgage pricing.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA. DEPT OF THE TREASURY

Regionals undercut bigger bank rivals

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Original article by Joyce Moullakis, Andrew White
The Australian – Page: 17 & 21 : 16-Oct-19

Analysis by RateCity shows that some of Australia’s regional banks are currently offering much lower variable home loan interest rates than the ‘big four’ bank. However, Victor German of Macquarie Group notes that existing customers at some of the smaller banks are also paying much higher mortgage interest rates than new customers. The mortgage pricing of smaller banks is among the issues that will be examined by the Australian Competition & Consumer Commission’s new inquiry into the sector.

CORPORATES
RATECITY PTY LTD, MACQUARIE GROUP LIMITED – ASX MQG, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, SUNCORP BALANCED PROPERTY FUND, SUNCORP GROUP LIMITED – ASX SUN, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, MACQUARIE BANK LIMITED – ASX MBL, BANK OF QUEENSLAND LIMITED – ASX BOQ, AMP BANK LIMITED, ING BANK (AUSTRALIA) LIMITED, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, JP MORGAN AUSTRALIA LIMITED

Cup day rate cut less likely on minutes

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Original article by Matthew Cranston
The Australian Financial Review – Page: 4 : 16-Oct-19

Financial markets have priced in a 36 per cent chance that the Reserve Bank will reduce the cash rate in November, following the release of the minutes from the central bank’s October board meeting. Amongst other things, board members expressed concern about the impact of historically low interest rates on savers and the housing market. The general consensus of economists is that the cash rate will remain on hold until February.

CORPORATES
RESERVE BANK OF AUSTRALIA