INTEREST RATES – AUSTRALIA

Next rates move will be up: RBA’s Harper

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Original article by James Glynn
The Australian – Page: 24 : 30-Jan-19

Reserve Bank of Australia board member Ian Harper has downplayed suggestions that the central bank could further reduce the cash rate. He says the strength of the domestic economy means that interest rates will rise, but stresses that this is his personal view. Meanwhile, Harper adds that there are no indications as yet that the downturn in residential property prices has prompted consumers to reduce their spending. Financial markets have priced in a better-than-even chance that the RBA will reduce the cash rate during 2019.

CORPORATES
RESERVE BANK OF AUSTRALIA, MELBOURNE BUSINESS SCHOOL, COMMONWEALTH SECURITIES LIMITED

Baird defends NAB interest rate hike

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Original article by Joyce Moullakis
The Australian – Page: 15 & 16 : 25-Jan-19

Sally Tindall of RateCity expects other major banks to increase their mortgage interest rates after National Australia Bank announced a rise in its rates for owner-occupiers and investors. NAB has indicated that a rise in wholesale funding costs was the main driver of the rate hike, but chief customer officer Mike Baird notes that it is the first increase in its standard variable interest rate since March 2017. NAB chose to leave its mortgage rates on hold when other banks lifted theirs in September.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RATECITY PTY LTD, BANK OF QUEENSLAND LIMITED – ASX BOQ, VIRGIN MONEY (AUSTRALIA) PTY LTD, RESERVE BANK OF AUSTRALIA, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

RBA will ignore gloom and stay a growth hawk

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Original article by James Glynn
The Australian – Page: 23 : 25-Jan-19

The Reserve Bank of Australia is tipped to scale back its economic growth forecasts for 2019 and 2020, after GDP growth was just 2.8 per cent year-on-year in the December 2018 quarter. The RBA had previously forecast growth of 3.5 per cent for 2018. However, the central bank is expected to maintain its hawkish stance, given that the unemployment rate eased in December. The strong labour market also means an increase in the cash rate is more likely than a cut.

CORPORATES
RESERVE BANK OF AUSTRALIA

Aussie tipped to dive 15pc this year

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Original article by Timothy Moore
The Australian Financial Review – Page: 31 : 25-Jan-19

Capital Economics has downgraded its forecast for the Australian dollar in 2019. The firm has warned that the currency could test $US0.60 and remain at around this level in 2020. It had previously expected the currency to trade at about $US0.65 in 2019 and $US0.70 in the following year. Capital Economics is also bearish about the outlook for Australia’s key export commodities, iron ore and coal, while it expects official interest rate cuts in 2019.

CORPORATES
CAPITAL ECONOMICS LIMITED, MORGAN STANLEY AUSTRALIA LIMITED

Prices of big city houses to fall 25pc

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Original article by Melissa Yeo
The Australian – Page: 26 : 24-Jan-19

Shane Oliver of AMP Capital says residential property prices in Melbourne and Sydney could fall by up to 25 per cent from peak to trough. Oliver had previously flagged a potential fall of up to 20 per cent, and he has warned that the downturn in the housing market could impact on Australia’s economic growth. Oliver also expects the Reserve Bank to reduce the cash rate by 25 basis points in August and November, although he says weak economic data could prompt it to move sooner.

CORPORATES
AMP CAPITAL INVESTORS LIMITED, RESERVE BANK OF AUSTRALIA, CORELOGIC AUSTRALIA PTY LTD, KPMG AUSTRALIA PTY LTD, DEMOGRAPHIA

Savers under pressure as banks keep lowering rates

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Original article by Duncan Hughes
The Australian Financial Review – Page: 5 : 15-Jan-19

Analysis by Canstar shows that the average interest rate for a 12-month term deposit of $50,000 is now 2.55 per cent. Likewise, the average online savings interest rate is now just 1.35 per cent, compared with a peak of 7.3 per cent in 2008. In contrast, the cash rate is 1.5 per cent and Australia’s inflation rate is 1.9 per cent. Professor Richard Holden from the University of New South Wales warns that low interest rates will encourage more savers to seek higher-risk investment options such as shares.

CORPORATES
CANSTAR PTY LTD, UNIVERSITY OF NEW SOUTH WALES, SEMAPHORE PRIVATE PTY LTD, RESERVE BANK OF AUSTRALIA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, VIRGIN MONEY (AUSTRALIA) PTY LTD, BANK OF QUEENSLAND LIMITED – ASX BOQ

Economists push rate rise to 2020

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Original article by Vesna Poljak
The Australian Financial Review – Page: 1 & 16 : 2-Jan-19

The latest quarterly survey of economists shows that the general consensus is that the Reserve Bank will leave official interest rates on hold until mid-2020. Previous expectations were for a rate rise in the second half of 2019. However, Shane Oliver of AMP Capital is one of three economists who expect the central bank to reduce the cash rate in 2019. Meanwhile, the US Federal Reserve is now widely tipped to increase interest rates twice in 2019.

CORPORATES
RESERVE BANK OF AUSTRALIA, AMP CAPITAL INVESTORS LIMITED, INDUSTRY SUPER AUSTRALIA PTY LTD, MARKET ECONOMICS PTY LTD, MOODY’S ANALYTICS AUSTRALIA PTY LTD, RBC CAPITAL MARKETS, UNIVERSITY OF TECHNOLOGY, SYDNEY, UNITED STATES. FEDERAL RESERVE BOARD, MACQUARIE GROUP LIMITED – ASX MQG, QIC LIMITED, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

New housing loans drop 7.4pc in quarter

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Original article by Samantha Bailey
The Australian – Page: 19 : 13-Dec-18

A new report from the Australian Prudential Regulation Authority shows that $89.2bn worth of new mortgage loans were written in the September quarter, which is 7.4 per cent lower than previously. However, authorised deposit-taking institutions have reported a 5.4 per cent increase in the total value of housing loans in the year to September. Chris Bedingfield of Quay Global Investors says the annual rate of house construction is now too high, given that banks are tightening their lending criteria. He adds that the Reserve Bank is now more likely to reduce rather than raise the cash rate.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, QUAY GLOBAL INVESTORS, RESERVE BANK OF AUSTRALIA

Expect the RBA to hold fire on rates

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Original article by James Glynn
The Australian – Page: 27 : 13-Dec-18

The Reserve Bank is still more likely to tighten rather than ease monetary policy, despite recent comments by governor Philip Lowe. He was most likely just outlining how the central bank could be expected to respond – including the potential for quantitative easing – in the event of an economic downturn. Although the Reserve Bank is still concerned about issues such as an emerging credit crunch, the odds still favour a rate rise, although this is unlikely to be for some time.

CORPORATES
RESERVE BANK OF AUSTRALIA

ACCC hits big banks, ports, tech

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Original article by James Frost
The Australian Financial Review – Page: 1 & 8 : 11-Dec-18

The Australian Competition & Consumer Commission has concluded that the nation’s four major banks engaged in "synchronised pricing" with regard to increases in interest-only home loan interest rates in June 2017. The big four banks raised their interest rates following the Australian Prudential Regulation Authority’s decision in mid-March to cap interest-only loans at 30 per cent of all new loans from the September quarter. The ACCC estimates that the rate rises boosted the banks’ profits by around $1.1bn.

CORPORATES
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA. PRODUCTIVITY COMMISSION, RESERVE BANK OF AUSTRALIA, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY