INTEREST RATES – AUSTRALIA

RBA keeps rates level for 18th meeting in row

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Original article by Jacob Greber
The Australian Financial Review – Page: 5 : 4-Apr-18

The general consensus of economists is that the Reserve Bank of Australia will not tighten monetary policy until 2019, after the cash rate was left unchanged at 1.5 per cent on 3 April. RBA governor Philip Lowe again stressed that there is likely to be a gradual fall in the unemployment rate and a rise in the inflation rate to the central bank’s target range. He also said low growth in wages is likely to persist for some time. The RBA has not adjusted official interest rates since August 2016.

CORPORATES
RESERVE BANK OF AUSTRALIA, INDEED INCORPORATED, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT

Jobs cool RBA’s outlook on rates

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Original article by David Rogers
The Australian – Page: 19 & 30 : 23-Mar-18

The Australian dollar fell in local trading on 22 March in response to data showing that the number of jobs created in February was below expectations at 17,500. Australia’s unemployment rate rose from 5.5 per cent to 5.6 per cent during the month, while the labour participation rate also increased. Economists suggest that the jobs data means the Reserve Bank is unlikely to increase official interest rates in the near-term. Meanwhile, the strength of the US economy has prompted the Federal Reserve to flag three interest rates rises in 2019, in addition to another two in 2018.

CORPORATES
RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD, UBS HOLDINGS PTY LTD, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, CAPITAL ECONOMICS LIMITED

US Fed set to rise further above RBA

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Original article by Vesna Poljak
The Australian Financial Review – Page: 1 & 32 : 23-Mar-18

The yield on US 10-year bonds has eased to 2.86 per cent in response to the Federal Reserve’s move to increase interest rates to 1.75 per cent. Kapstream Capital’s Steve Goldman expects the central bank to increase US rates to 2.5 per cent, adding that this is more likely to be in 2019 rather than 2018. The US federal funds rate is now higher than Australia’s cash rate for the first time since 2000. The interest rate differential is expected to widen, as the Federal Reserve has flagged further rate rises in 2018 and 2019. Most analysts do not expect the Reserve Bank to do so until at least the March 2019 quarter.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF AUSTRALIA, KAPSTREAM CAPITAL PTY LTD, NOMURA AUSTRALIA LIMITED, UBS GLOBAL ASSET MANAGEMENT (AUSTRALIA) LIMITED

RBA in no hurry to follow Fed on interest rates

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Original article by David Rogers
The Australian – Page: 27 : 21-Mar-18

The Reserve Bank of Australia has previously forecast that economic growth would average around three per cent in 2018. However, the minutes of the central bank’s latest monthly board meeting show that it expects economic growth to exceed "potential growth" in 2018. Bill Evans of Westpac notes that the Reserve Bank deems potential growth to be 2.75 per cent. Meanwhile, there seems to be little prospect of a rise in Australia’s cash rate in the near-term, while the Federal Reserve is widely tipped to increase US rates in March.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, UNITED STATES. FEDERAL RESERVE BOARD, JP MORGAN AUSTRALIA LIMITED, CAPITAL ECONOMICS LIMITED

What would it take to get the Reserve Bank moving in 2018?

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Original article by Patrick Commins
The Australian Financial Review – Page: 27 : 8-Mar-18

There is speculation that the Reserve Bank may increase the cash rate in November 2018, although economists generally expect rates to remain on hold until 2019. Regardless, a rate rise in the near-term is unlikely, and the central bank seems certain to break its record for the longest consecutive run of board meetings with no change in monetary policy. Meanwhile, Chris Nicol and Daniel Blake of Morgan Stanley say that wages growth would be the key factor that would prompt the Reserve Bank to increase the cash rate in 2018.

CORPORATES
RESERVE BANK OF AUSTRALIA, MORGAN STANLEY AUSTRALIA LIMITED, CITIGROUP PTY LTD, TD SECURITIES, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

A patient RBA risks playing catch-up later

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Original article by Patrick Commins
The Australian Financial Review – Page: 21 : 19-Feb-18

Westpac estimates that there is a 60 per cent chance that the Reserve Bank will increase official interest rates in 2018. There had been general consensus in financial markets early in 2018 that a rate rise before the end of the year was almost certain, but expectations have been dampened by factors such as market volatility and the latest inflation data. However, other major central banks are tightening monetary policy, prompting some experts to warn that the Reserve Bank may need to increase rates more aggressively at some stage.

CORPORATES
RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD, BANK OF AMERICA AUSTRALIA LIMITED, MERRILL LYNCH (AUSTRALIA) PTY LTD, CITIGROUP PTY LTD

Low inflation, low unemployment, and Lowe restraint

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Original article by David Uren
The Australian – Page: 1 & 6 : 9-Feb-18

Reserve Bank governor Philip Lowe has indicated that an interest rate rise is now more likely than a rate cut. However, he says the central bank is unlikely to tighten monetary policy until inflation rises around the mid-point of its target range of 2-3 per cent and there is a further reduction in the unemployment rate. He has stressed that the Reserve Bank does not need to adjust monetary policy in line with other central banks. Lowe also says the Reserve Bank does not expect its inflation forecasts to be unduly affected by the recent sharemarket volatility.

CORPORATES
RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD

Why the RBA will hike interest rates

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Original article by Karen Maley
The Australian Financial Review – Page: 30 : 6-Feb-18

Ellerston Capital’s Tim Toohey expects the Reserve Bank to increase official interest rates by 125 basis points over the next three years, beginning in the second half of 2018. He says the prospect of higher interest rates will have relatively little impact on consumers, despite rising household debt, arguing that the net worth of Australian households has risen strongly over the last decade. Meanwhile, he attributes a slump in retail spending in the September 2017 quarter to the Federal Government’s changes in the rules on voluntary superannuation contributions rather than negative consumer sentiment.

CORPORATES
ELLERSTON CAPITAL PTY LTD, RESERVE BANK OF AUSTRALIA

Stronger $A a bump for RBA rate hike

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Original article by Patrick Durkin
The Australian Financial Review – Page: 26 : 29-Jan-18

The Australian dollar rose above $US0.81 in offshore trading on the weekend of 27-28 January, extending its gains since early December to eight per cent. Factors such as a falling US dollar and strengthening commodity prices have contributed to the Australian currency’s recent rally. However, the dollar’s rise may affect the timing of any change in official interest rates. Meanwhile, Citigroup expects the currency to be trading at around its current level at the end of 2018, although Westpac anticipates a fall of around $US0.09.

CORPORATES
CITIGROUP PTY LTD, WESTPAC BANKING CORPORATION – ASX WBC, AMP LIMITED – ASX AMP, RESERVE BANK OF AUSTRALIA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, UNITED STATES. FEDERAL RESERVE BOARD

Jobs surge supports RBA’s growth forecasts

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Original article by David Rogers
The Australian – Page: 27 : 15-Dec-17

The latest jobs data may strengthen the case for the Reserve Bank of Australia to begin lifting the cash rate in late 2018. Some 62,000 jobs were created in November, and 383,000 in the last year, while the unemployment rate was steady at 5.4 per cent. The Australian Bureau of Statistics data also supports the central bank’s view that economic growth will be above its trend rate in 2018. However, Tom Kennedy of JP Morgan says the RBA is likely to keep interest rates on hold while the unemployment rate remains at its current level, while George Tharenou of UBS does not expect a rate rise until 2019.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, RESERVE BANK OF AUSTRALIA, JP MORGAN AUSTRALIA LIMITED, UBS HOLDINGS PTY LTD, AMP CAPITAL INVESTORS LIMITED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT