INTEREST RATES – AUSTRALIA

Rates must rise, APRA veteran says

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 4 : 11-Jul-18

Jeffrey Carmichael is the latest monetary policy expert to have urged the Reserve Bank of Australia to begin increasing official interest rates. The inaugural chairman of the Australian Prudential Regulation Authority has warned of the economic risks of failing to begin raising the cash rate when other central banks are doing so. He has suggested that there may be a need for up to eight rate rises, but stresses the need to do so gradually. He adds that the domestic economy is strong enough to absorb rate rises without any significant risk. Carmichael worked at the RBA for two decades.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, AUSTRALIAN NATIONAL UNIVERSITY, UNITED STATES. FEDERAL RESERVE BOARD, EUROPEAN CENTRAL BANK, PROMONTORY AUSTRALASIA PTY LTD

All eyes on big four as Macquarie lifts rates

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Original article by Joyce Moullakis
The Australian Financial Review – Page: 11 & 16 : 10-Jul-18

There is growing speculation that Australia’s four major banks will increase their mortgage interest rates independently of the Reserve Bank. Macquarie is the latest bank to have advised of a rise in its variable rates for new and existing customers. Jonathan Mott of UBS says the large banks may opt to lift their rates in coming months to reflect the increase in their wholesale funding costs, although Sean Fenton of Tribeca Investment Partners notes that the major banks may be wary of attracting further political scrutiny at present. Some smaller lenders recently increased their mortgage rates.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, TRIBECA INVESTMENT PARTNERS PTY LTD, PEPPER GROUP LIMITED, AMP BANK LIMITED, SUNCORP BANK, AUSWIDE BANK LIMITED – ASX ABA, IMB LIMITED, ME BANK, BANK OF QUEENSLAND LIMITED – ASX BOQ, MORGAN STANLEY AUSTRALIA LIMITED, AUSTRALIA. ROYAL COMMISSION INTO MISCONDUCT IN THE BANKING, SUPERANNUATION AND FINANCIAL SERVICES INDUSTRY

Susceptible $A tipped to fall to US70c

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Original article by Sarah Turner
The Australian Financial Review – Page: 27 : 10-Jul-18

Some economists are bearish about the outlook for the Australian dollar, which has traded at close to a 12-month low since mid-June. Stephen Roberts of Laminar Capital expects the currency to be trading at $US0.70 at the end of 2018, citing the prospect of a growing gap between official interest rates in Australia and the US. Elliot Clarke of Westpac in turn expects the Australian dollar to test the $US0.70 level in the second half of 2019.

CORPORATES
LAMINAR CAPITAL, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, BANK OF AMERICA AUSTRALIA LIMITED, MERRILL LYNCH (AUSTRALIA) PTY LTD, RESERVE BANK OF AUSTRALIA

RBA holds rates firm, defying global trend

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Original article by Adam Creighton
The Australian – Page: 19 & 27 : 4-Jul-18

Financial markets have priced in little chance of monetary policy tightening by April 2019 after the Reserve Bank of Australia left the cash rate unchanged at 1.5 per cent on 3 July. Economists note that the wording of the statement issued by governor Philip Lowe was largely similar to the previous month. Lowe reiterated that progress in reducing the unemployment rate and lifting inflation to the RBA’s target range of 2-3 per cent is likely to be gradual. He also noted the potential for a trade war to impact on global economic growth

CORPORATES
RESERVE BANK OF AUSTRALIA, BANK FOR INTERNATIONAL SETTLEMENTS, AUSTRALIAN BUREAU OF STATISTICS, HSBC AUSTRALIA HOLDINGS PTY LTD, WESTPAC BANKING CORPORATION – ASX WBC

Property fall tipped to soften RBA

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

The Reserve Bank of Australia is widely tipped to leave official interest rates unchanged at 1.5 per cent on 3 July. However, the central bank’s so-called "shadow board" believes that there is a strong case for the cash rate to be increased immediately, given factors such as low wages growth, low unemployment and an inflation rate that is within the RBA’s target range. Meanwhile, new data shows that there was an 0.3 per cent decline in house prices in major cities during June.

CORPORATES
RESERVE BANK OF AUSTRALIA, CORELOGIC AUSTRALIA PTY LTD, NOMURA AUSTRALIA LIMITED, AUSTRALIAN NATIONAL UNIVERSITY, MONASH UNIVERSITY, UNIVERSITY OF SYDNEY, MACQUARIE UNIVERSITY

No RBA rate hikes for a year

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Original article by Vesna Poljak, Sarah Turner
The Australian Financial Review – Page: 1 & 20 : 2-Jul-18

A quarterly survey of economists shows that the general consensus is that the Reserve Bank of Australia will leave interest rates on hold at 1.5 per cent until June 2019. The cash rate is now expected to reach two per cent by the end of 2019. However, former ANZ Bank chief economist Warren Hogan expects one rate increase by mid-2019, arguing that the RBA needs to begin the process of normalising monetary policy. Matthew Peter of QIC also expects one rate rise in the next 12 months.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, QIC LIMITED, UNIVERSITY OF TECHNOLOGY, SYDNEY, BANK FOR INTERNATIONAL SETTLEMENTS, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, UNITED STATES. FEDERAL RESERVE BOARD, IFM INVESTORS PTY LTD, MARKET ECONOMICS PTY LTD, LAMINAR CAPITAL, CAPITAL ECONOMICS LIMITED, WESTPAC BANKING CORPORATION – ASX WBC, EUROPEAN CENTRAL BANK

RBA sidelined as cost of money rises

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Original article by Jacob Greber
The Australian Financial Review – Page: 3 : 28-Jun-18

Futures market pricing suggests that investors expect the Reserve Bank of Australia to keep official interest rates on hold until late 2019. However, the gap between the cash rate and the bank bill swap rate has increased to 61 basis points, compared with an average of 18 basis points for much of the last decade. The rise in the BBSW may eventually prompt Australia’s major banks to increase their mortgage interest rates independently of the RBA, with several of the nation’s smaller lenders having already done so.

CORPORATES
RESERVE BANK OF AUSTRALIA, BANK OF QUEENSLAND LIMITED – ASX BOQ, ME BANK, AMP BANK LIMITED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, IFM INVESTORS PTY LTD

Plea to end unhealthy RBA cash rate

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Original article by Jacob Greber
The Australian Financial Review – Page: 5 : 26-Jun-18

Economists James Morley from the University of Sydney and Mark Crosby of Monash University say the Reserve Bank of Australia needs to increase official interest rates. Crosby says the cash rate is at an "unhealthy level" at just 1.5 per cent and it is safe to begin tightening monetary policy. Morley argues that there is scope for at least two rate rises without having any adverse impact on the economy. Former RBA board member Warwick McKibbin has called for an increase in the cash rate.

CORPORATES
RESERVE BANK OF AUSTRALIA, UNIVERSITY OF SYDNEY, MONASH UNIVERSITY, AUSTRALIAN NATIONAL UNIVERSITY, GOLDMAN SACHS AUSTRALIA PTY LTD, UNITED STATES. FEDERAL RESERVE BOARD

RBA’s Lowe urged to raise rates

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 6 : 25-Jun-18

The general consensus of market economists is that the Reserve Bank of Australia should leave official rates on hold at 1.5 per cent for the rest of 2018 and most of 2019. However, former RBA board member Warwick McKibbin says the central bank should increase the cash rate by at least 25 basis points, as interest rates are beginning to rise globally. He also argues that the RBA should gradually shift its focus from an inflation target of 2-3 per cent toward a nominal income target.

CORPORATES
RESERVE BANK OF AUSTRALIA, BANK OF ENGLAND, UNITED STATES. FEDERAL RESERVE BOARD, FEDERAL RESERVE BANK OF NEW YORK, EUROPEAN CENTRAL BANK, AUSTRALIAN NATIONAL UNIVERSITY, THE BROOKINGS INSTITUTION

RBA to keep interest rates on hold until 2020: Macquarie

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Original article by Patrick Commins
The Australian Financial Review – Page: 31 : 22-Jun-18

Macquarie Group economists Ric Deverell and Justin Fabo forecast that Australia’s unemployment rate will not fall below five per cent until 2020. They warn that "persistent" spare capacity in the economy will ensure that wages growth remains subdued in the near-term. As a result, they do not expect the Reserve Bank to tighten monetary policy until at least 2020. However, they note that a number of domestic and international factors could affect the timing of an interest rate rise.

CORPORATES
RESERVE BANK OF AUSTRALIA, MACQUARIE GROUP LIMITED – ASX MQG