INTEREST RATES – AUSTRALIA

No option for savers as deposits slashed

roymorgansocial Leave a comment

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

roymorgansocial Leave a comment

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having a lower inflation target would end the RBA’s obsession with reducing interest rates to meet what he argues are outdated inflation targets.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

roymorgansocial Leave a comment

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

roymorgansocial Leave a comment

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

roymorgansocial Leave a comment

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

roymorgansocial Leave a comment

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

Savers come out second best as banks quietly slash interest rates on deposits

roymorgansocial Leave a comment

Original article by Michael Roddan
The Australian – Page: 17 & 27 : 11-Oct-19

Lenders have cut interest rates on term deposits by between one and and 35 basis points since the Reserve Bank cut the official cash rate by 25 basis points on 1 October, according to data from ­RateCity. National Seniors Australia’s chief advocate Ian Henschke notes that a third of its members have their money in term deposits, with interest rates on term deposits now at their lowest since the 1950s. He claims that the federal government is "profiteering off the backs of pensioners", by not reducing the deeming rate.

CORPORATES
RESERVE BANK OF AUSTRALIA, RATECITY PTY LTD, NATIONAL SENIORS AUSTRALIA LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN

Credit raters circle wagons around banks

roymorgansocial Leave a comment

Original article by James Eyers, James Frost
The Australian Financial Review – Page: 11 & 14 : 10-Oct-19

Australia’s banks are under growing scrutiny over their failure to reduce their mortgage interest rates by 0.25 per cent in line with the latest official interest rate cut. However, S&P Global Ratings says banks’ profits and capital buffers may be adversely affected if they yield to political pressure and match the Reserve Bank’s rate cut. S&P adds that this could in turn prompt a review of the banking sector’s credit rating. Moody’s Investors Service and Fitch Ratings are also supportive of the banks’ decision to withhold part of the official interest rate cut.

CORPORATES
S&P GLOBAL RATINGS, MOODY’S INVESTORS SERVICE INCORPORATED, FITCH RATINGS LIMITED, RESERVE BANK OF AUSTRALIA, IBISWORLD PTY LTD, COPLEY FUND RESEARCH, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET

ANZ boss calls for QE summit

roymorgansocial Leave a comment

Original article by Tony Boyd, Vesna Poljak
The Australian Financial Review – Page: 1 & 22 : 10-Oct-19

The growing prospect of negative interest rates and unconventional policy measures such as quantitative easing has prompted ANZ Bank CEO Shayne Elliott to propose holding a summit on the issue. He says it should include representatives from the major banks, regional banks, industry regulators, the Treasury and the Reserve Bank. Elliott says that amongst other things, the summit could discuss issues such as the broader economic implications of QE and the role of banks in the economy.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, AUSTRALIA. DEPT OF THE TREASURY, RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, UNIVERSITY OF MELBOURNE. INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH, UNITED STATES. FEDERAL RESERVE BOARD, EUROPEAN CENTRAL BANK, BANK FOR INTERNATIONAL SETTLEMENTS

Evans warns of negative impact of rate cuts

roymorgansocial Leave a comment

Original article by David Rogers
The Australian – Page: 27 : 10-Oct-19

Financial markets expect the cash rate to fall to 0.5 per cent by February, and market pricing suggests that there is more than a 50 per cent chance of further rate cuts by mid-2020. Westpac’s chief economist Bill Evans says the Reserve Bank should take note of declining consumer confidence when considering further rate cuts, and the "possible unintended consequences" of any move toward negative interest rates. The general consensus of economists is that fiscal policy would be more effective than unconventional monetary policy measures such as quantitative easing.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, RESERVE BANK OF AUSTRALIA, UNIVERSITY OF MELBOURNE. INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, ROY MORGAN LIMITED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, GOLDMAN SACHS AUSTRALIA PTY LTD, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AMP CAPITAL INVESTORS LIMITED