INTEREST RATES – AUSTRALIA

Fiscal policy needs to play bigger role

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Original article by David Rogers
The Australian – Page: 27 : 12-Jul-19

HSBC Australia’s chief economist Paul Bloxham says the federal government’s tax cuts are likely to have a similar short-term economic impact as an 0.5 per cent reduction in the cash rate. Bloxham adds that there is plenty of scope for the government to stimulate the economy via fiscal policy, particularly given that there is limited capacity for monetary policy to provide further stimulus. He has also flagged the possibility of establishing an independent fiscal authority to co-ordinate fiscal and monetary policy.

CORPORATES
HSBC AUSTRALIA HOLDINGS PTY LTD, RESERVE BANK OF AUSTRALIA

Big four in great rate cuts rip-off

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Original article by Adam Creighton, David Tanner
The Australian – Page: 1 & 6 : 10-Jul-19

The gap between the cash rate and the average variable mortgage interest rate of Australia’s major banks was consistently around 1.8 percentage points between 1997 and 2007. However, this gap has widened significantly since then, and the two consecutive official interest rate cuts has increased it to a 25-year high of 3.94 percentage points. The banks contend that factors such as rising funding costs, capital requirements and increased regulation mean it has become more difficult to move in tandem with the Reserve Bank.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA. PRODUCTIVITY COMMISSION, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

RBA, tax cuts are more than enough boost

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Original article by Matthew Cranston
The Australian Financial Review – Page: 4 : 8-Jul-19

Stephen Koukoulas of Market Economics and Andrew Charlton from Alphabeta say that further fiscal stimulus is not needed at present to boost the Australian economy. They argue that the federal government’s income tax cuts, the Reserve Bank’s latest official interest rate reduction and an easing of credit restrictions should be sufficient, and in fact may provide a greater economic boost than many observers anticipate. They add that too much fiscal stimulus could put a return to a Budget surplus at risk.

CORPORATES
MARKET ECONOMICS PTY LTD, ALPHABETA, RESERVE BANK OF AUSTRALIA

Time is money as CBA waits on cuts

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Original article by Cliona O’Dowd
The Australian – Page: 21 & 24 : 5-Jul-19

The Commonwealth Bank’s decision to delay a 19 basis point reduction in its variable home loan interest rates until 23 July will boost its interest income by $43m. The other three major banks will also gain additional interest income from mortgage customers by delaying rate cuts by periods ranging from nine days to two weeks. It is estimated that the big four banks’ move to delay passing on the official interest rate cut in full or in part will boost their interest income by a combined $97m.

CORPORATES
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, SHAW AND PARTNERS LIMITED, MOZO PTY LTD, HSBC AUSTRALIA HOLDINGS PTY LTD, FIRSTMAC LIMITED, ME BANK

Lenders reluctant to pass on cut in full

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Original article by Joyce Moullakis
The Australian – Page: 19 : 4-Jul-19

Macquarie Bank, Suncorp, ME Bank and ING will reduce their interest rates on a range of mortgage products by less than the latest 25 basis point reduction in the cash rate. They have joined Westpac, National Australia Bank and the Commonwealth Bank in not passing on the Reserve Bank’s interest rate cut in full. However, a number of smaller lenders have reduced their mortgage rates by the full amount, including Athena, Resimac and Newcastle Permanent.

CORPORATES
MACQUARIE BANK LIMITED – ASX MBL, SUNCORP BANK, SUNCORP GROUP LIMITED – ASX SUN, ME BANK, ING BANK (AUSTRALIA) LIMITED, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, ATHENA HOME LOANS PTY LTD, RESIMAC GROUP LIMITED – ASX RMC, NEWCASTLE PERMANENT BUILDING SOCIETY LIMITED, STATE CUSTODIANS PTY LTD, RACQ BANK, HOMESTAR FINANCE PTY LTD, REDUCE HOME LOANS, RATECITY PTY LTD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, RESERVE BANK OF AUSTRALIA, MORGAN STANLEY AUSTRALIA LIMITED, SHAW AND PARTNERS LIMITED

Trade surplus hasn’t hushed rate cut talk

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Original article by Matthew Cranston
The Australian Financial Review – Page: 7 : 4-Jul-19

Australia’s trade surplus rose to a record $5.7bn in May, eclipsing the previous high of $4.8bn in April. The big trade surplus was driven by strong growth in iron ore export volumes and the price of the steel input. Kaixin Owyong of National Australia Bank says the record trade surplus could put the nation on track to achieve a current account surplus for the first time in decades. Meanwhile, some economists have flagged the potential for another official interest rate cut in August.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RESERVE BANK OF AUSTRALIA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, UBS HOLDINGS PTY LTD

Big four rate game plan takes shape

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Original article by James Frost
The Australian Financial Review – Page: 9 : 3-Jul-19

The ANZ Bank’s s variable mortgage interest rates for all customers will be reduced by 25 basis points, in line with the Reserve Bank’s official interest rate cut. The Commonwealth Bank in turn will reduce its rates for interest-only customers by 25 basis points, although those with principal and interest loans will receive a rate cut of just 19 basis points. Meanwhile, Westpac will reduce its mortgage interest rates by 20 basis points, and the ANZ Bank’s will be cut by 19 basis points.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, RESERVE BANK OF AUSTRALIA, ATHENA HOME LOANS PTY LTD, AUSTRALIA. DEPT OF THE TREASURY

Lowe leaves door open for more

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Original article by Andrew White
The Australian – Page: 17 & 25 : 3-Jul-19

Reserve Bank of Australia governor Philip Lowe has signalled the potential for further easing of monetary policy after the cash rate was reduced to a record low of one per cent on 2 July. Lowe says there is still a lot of spare capacity in the economy, and it should be possible to reduce both the unemployment and underemployment rate. It was the first time the RBA had cut official interest rates in two consecutive months since 2012, and Paul Bloxham of HSBC says this suggests that the central bank is worried about economic growth.

CORPORATES
RESERVE BANK OF AUSTRALIA, HSBC AUSTRALIA HOLDINGS PTY LTD, BUSINESS COUNCIL OF AUSTRALIA

RBA to cut twice more, say economists

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Original article by Patrick Commins
The Australian Financial Review – Page: 1 & 18 : 1-Jul-19

A quarterly survey of economists shows that there is a widely held expectation that the Reserve Bank of Australia will reduce official interest rates two more times during 2019. This would reduce the cash rate to 0.75 per cent, but David Plank of the ANZ Banks says further rate cuts could be necessary, depending on the outlook for the global economy and the Australian dollar. David Bassanese of BetaShares says the RBA would be unlikely to take the cash rate below 0.5 per cent, and it would probably opt for quantitative easing instead. Many economists expect a rate cut on 2 July.

CORPORATES
RESERVE BANK OF AUSTRALIA, BETASHARES CAPITAL LIMITED, ST GEORGE BANK LIMITED, BIS OXFORD ECONOMICS PTY LTD, AMP CAPITAL INVESTORS LIMITED, MOODY’S ANALYTICS AUSTRALIA PTY LTD, RBC CAPITAL MARKETS, DEUTSCHE BANK AG, INDUSTRY SUPER AUSTRALIA PTY LTD

Capitals hit bottom of property cycle

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Original article by Duncan Hughes
The Australian Financial Review – Page: 3 : 1-Jul-19

Valuation company Herron Todd White contends that Melbourne, Perth, Darwin and Brisbane are at the bottom of the residential property cycle, and that Sydney is not far off getting there. On the other hand, Canberra, where there is a shortage of property, is at market peak. HTW’s assessment comes as a majority of economists predict that the Reserve Bank will cut cash rates for the second month in a row, even though rates are already at a record low.

CORPORATES
HERRON TODD WHITE AUSTRALIA PTY LTD, RESERVE BANK OF AUSTRALIA