INTEREST RATES – AUSTRALIA

Wage growth at zero puts lid on rate hikes

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Original article by Adam Creighton
The Australian – Page: 2 : 16-Aug-18

Data from the Australian Bureau of Statistics shows that the national wage price index ­increased by 2.1 per in the year to June, in line with the inflation rate. Wages in the private sector increased by two per cent, compared with 2.4 per cent growth in public sector wages. Shane Oliver of AMP Capital notes that annual wage growth would have been around 1.9 per cent without the increase in the minimum wage. The latest wage data is likely to ensure that official interest rates remain on hold for some time.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, AMP CAPITAL INVESTORS LIMITED, JP MORGAN AUSTRALIA LIMITED, MACQUARIE BANK LIMITED – ASX MBL, CAPITAL ECONOMICS LIMITED, RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY

RBA’s Lowe has his share of doubters

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 32 : 10-Aug-18

The Reserve Bank of Australia has not increased the official cash rate since November 2010, but governor Philip Lowe indicated on 8 August that it may not be long before it has to lift rates. An increase in interest rates would mean that the RBA felt that its inflation target of 2.5 per cent might be not be far off being reached, but some economists are not so certain about this, given the experience of economies in other parts of the world.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, MACQUARIE GROUP LIMITED – ASX MQG

Inflation target here to stay, says Lowe

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Original article by Patrick Commins
The Australian Financial Review – Page: 5 : 9-Aug-18

The Reserve Bank of Australia remains committed to its long-term goal of returning the inflation rate to 2.5 per cent. Central bank governor Philip Lowe says the inflation target will not be reviewed. Lowe has also indicated that achieving the inflation target is not a prerequisite for increasing official interest rates. He added that the statement of monetary policy to be released on 10 August will show that the RBA does not expect the unemployment rate to fall to five per cent before the end of 2020.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, THE ANIKA FOUNDATION

Slowly but surely, the RBA is turning positive

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Original article by David Rogers
The Australian – Page: 27 : 8-Aug-18

As expected, the Reserve Bank of Australia left interest rates on hold at 1.5 per cent on 7 August, marking two years since its last change in monetary policy. The RBA has maintained its guidance for economic growth in 2018 and 2019, while it expects the unemployment rate to ease to around five per cent over the next several years. The central bank has also indicated that although wages growth is likely to remain low, it should rise over time due to the improvement in the domestic economy.

CORPORATES
RESERVE BANK OF AUSTRALIA, AMP CAPITAL INVESTORS LIMITED, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

RBA set to celebrate two years on hold

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Original article by Patrick Commins
The Australian Financial Review – Page: 5 : 6-Aug-18

The Reserve Bank of Australia has left the cash rate unchanged at 1.5 per cent since August 2016, and the central bank is widely tipped to maintain the status quo at its board meeting on 7 August 2018. Bond traders have priced in a 20 per cent chance of a rate rise by the end of 2018, and an 80 per cent chance by mid-2019. The RBA has previously signalled that interest rates are likely to remain on hold until signs of wages growth emerge, and analysts generally believe that there will need to be upward pressure on wages for the unemployment rate to fall below five per cent.

CORPORATES
RESERVE BANK OF AUSTRALIA

Petrol prices to drive inflation higher

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Original article by Patrick Commins
The Australian Financial Review – Page: 3 : 25-Jul-18

The median forecast of economists polled by Bloomberg is for consumer price inflation of 0.5 per cent in the June quarter, compared with 0.4 per cent in the March quarter. Australia’s consumer price inflation is forecast to have risen to 2.2 per cent in the year to June, up from 1.9 per cent previously. A sharp rise in the price of petrol in the June quarter is tipped to have been a major contributor to the rise in the inflation rate. Economists do not expect the latest inflation data to have a material impact on the outlook for official interest rates.

CORPORATES
BLOOMBERG LP, AUSTRALIAN BUREAU OF STATISTICS, RESERVE BANK OF AUSTRALIA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, SOCIETE GENERALE AUSTRALIA LIMITED, MORGAN STANLEY AUSTRALIA LIMITED, JP MORGAN AUSTRALIA LIMITED

Jobs boom raises stakes for RBA

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 4 : 20-Jul-18

Official data shows that Australia’s unemployment rate was steady at 5.4 per cent in June, with the economy adding a higher-than-expected 50,900 jobs. This comprised 41,200 full-time and 9,700 part-time jobs. The data prompted a rebound in the Australian dollar on 19 July, while it may put pressure on the Reserve Bank to move more quickly to tighten monetary policy. The trend jobless rate was last at its current level in November 2012, when the cash rate was 3.25 per cent, compared with 1.5 per cent at present.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN BUREAU OF STATISTICS, GOLDMAN SACHS AUSTRALIA PTY LTD, TD SECURITIES, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, AUSTRALIA. DEPT OF THE TREASURY, UNITED STATES. FEDERAL RESERVE BOARD

Fed chief Powell stays put with policy for now

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Original article by David Rogers
The Australian – Page: 27 : 19-Jul-18

US Federal Reserve chairman Jerome Powell has signalled that the central bank will retain its stated policy of increasing interest rates gradually, at least for now. The potential for a full-blown trade war with China appears to be the main reason for Powell’s caveat of "for now". Meanwhile, UBS forecasts that the Reserve Bank of Australia would most likely delay tightening monetary policy until beyond 2020 in the event of a full trade war.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. FEDERAL OPEN MARKET COMMITTEE, UBS HOLDINGS PTY LTD, RESERVE BANK OF AUSTRALIA, STANDARD AND POOR’S 500 INDEX

RBA flags risk of record household debt

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Original article by David Uren
The Australian – Page: 2 : 18-Jul-18

The minutes of the Reserve Bank of Australia’s board meeting for July indicate that although the central bank expects to begin tightening monetary policy, it is in no hurry to do so. The minutes also show that high levels of household debt continues to be a concern for the central bank. It noted that while an increase in the cash rate could be expected to reduce consumer spending, the high level of debt means a rate cut may not necessarily result in increased spending.

CORPORATES
RESERVE BANK OF AUSTRALIA

Treasury boss warns against RBA rises

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Original article by Jacob Greber
The Australian Financial Review – Page: 3 : 13-Jul-18

Economists have been urging the Reserve Bank of Australia to use the opportunity afforded to it by the nation’s strong economy to lift interest rates. They are concerned that failure to do so will leave it struggling to respond to any future financial crisis. RBA governor Philip Lowe has made it clear that rates will not go up until inflation rises, while outgoing Treasury secretary John Fraser has also warned against calls for rate increases.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY