INTEREST RATES – AUSTRALIA

Slow growth puts a brake on rate rises

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Original article by David Rogers
The Australian – Page: 17 & 26 : 7-Dec-17

The latest GDP data has prompted financial markets to price in an 84 per cent chance that the Reserve Bank of Australia will increase the cash rate by the end of 2018, down from 94 per cent previously. The economy expanded by a lower-than-expected 0.6 per cent in the September 2017 quarter, while year-on-year growth rose from 1.9 per cent to 2.8 per cent. Meanwhile, growth in household consumption slowed to just 0.1 per cent quarter-on-quarter in the three months to September.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, JP MORGAN AUSTRALIA LIMITED

Rebound in wage data offers glimmer of hope

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Original article by Jacob Greber
The Australian Financial Review – Page: 5 : 5-Dec-17

Data from the Australian Bureau of Statistics shows that wages in the private sector rose by 1.1 per cent quarter-on-quarter during the three months to September, and 2.5 per cent year-on-year. Data on public sector wage growth will be released with the national accounts on 6 December. However, the latest data suggests that the Reserve Bank will have scope to increase the cash rate if the recent growth in wages is sustained. Craig James of CommSec expects an interest rate rise in late 2018.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, RESERVE BANK OF AUSTRALIA, COMMONWEALTH SECURITIES LIMITED, AUSTRALIA. FAIR WORK COMMISSION, GOLDMAN SACHS AUSTRALIA PTY LTD

House prices to fall further: economists

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Original article by Su-Lin Tan
The Australian Financial Review – Page: 6 : 5-Dec-17

UBS says the Reserve Bank of Australia is unlikely to reduce official interest rates in the near-term, despite data showing that house prices in Sydney fell by 1.3 per cent in the three months to November. UBS notes that in the past the RBA has frequently reduced the cash rate in response to a sharp fall in house prices. The firm adds that a further downturn in house prices is likely. Meanwhile, LF Economics expects the royal commission into the banking sector to have a significant impact on house prices.

CORPORATES
UBS HOLDINGS PTY LTD, RESERVE BANK OF AUSTRALIA, LF ECONOMICS, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

OECD urges RBA to start lifting rates

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Original article by Jacob Greber
The Australian Financial Review – Page: 3 : 29-Nov-17

The OECD expects the Reserve Bank of Australia to lift interest rates in the second half of 2018, even if the inflation rate remains within the RBA’s target of two to three per cent. The OECD argues that rates will need to be increased in order to address concerns about Australia’s debt levels and to dampen down its housing market. The OECD has also called on the federal government to stick to its goal of improving the budget.

CORPORATES
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD

Signs of life in corporate investment: RBA

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Original article by David Rogers, James Glynn
The Australian – Page: 28 : 14-Nov-17

The Reserve Bank’s deputy governor Guy Debelle has told the UBS Australasia Conference that business investment outside of Australia’s mining sector has been stronger than official figures suggest in the last several years. He said the services sector in particular has recorded strong growth in capital investment, while there has also been an increase in public investment in infrastructure. Meanwhile, Debelle noted that a rise in the cash rate will be dependent on an increase in wages and inflation.

CORPORATES
RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD

RBA can just sit back and watch the Fed

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Original article by Karen Maley
The Australian Financial Review – Page: 30 : 13-Nov-17

The latest monetary policy statements of the Reserve Bank and the Federal Reserve used identical wording to describe the current state of the Australian and US economies. The Federal Reserve is widely tipped to increase official interest rates again in December, which will allow the Reserve Bank to observe the impact of a rate rise in a low-inflation, low wages growth environment before taking any action of its own. There is no pressing need for the Reserve Bank to act, given that the unemployment rate remains well above that of the US and is not expected to fall in the next two years.

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

Growth hopes up as rates stay low

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Original article by David Uren
The Australian – Page: 2 : 8-Nov-17

Financial markets expect the Reserve Bank of Australia to leave official interest rates at 1.5 per cent until the second half of 2018, after it made no change to monetary policy on 7 November. RBA governor Philip Lowe noted that business conditions are improving, particularly the outlook for business investment in non-mining sectors of the economy. He also said growth in wages will remain low in the near-term but an upturn in the labour market will eventually have a flow-on effect, while he has forecast a further decline in the unemployment rate.

CORPORATES
RESERVE BANK OF AUSTRALIA, AMP LIMITED – ASX AMP, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, STANDARD AND POOR’S ASX 200 INDEX

RBA held up by flagging inflation

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 2 : 26-Oct-17

Official data shows that growth in Australia’s headline consumer prices was below expectations at just 0.6 per cent in the September quarter, for an annual inflation rate of 1.8 per cent. Growth in the core inflation rate slowed to 0.3-0.4 per cent, compared with 0.5 per cent in the June quarter. The data has dampened expectations that the Reserve Bank will increase the cash rate in the near-term, with financial markets now pricing in a 36 per cent chance of a rate rise by May.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, COLES SUPERMARKETS AUSTRALIA PTY LTD, WESFARMERS LIMITED – ASX WES, GOLDMAN SACHS AUSTRALIA PTY LTD, NOMURA AUSTRALIA LIMITED, AUSTRALIA. DEPT OF THE TREASURY

NAB, CBA: We didn’t hike rates for profit

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Original article by James Frost
The Australian Financial Review – Page: 3 : 23-Oct-17

The Australian Prudential Regulation Authority requested in March that interest-only loans be capped at 30 per cent of all mortgages. National Australia Bank and Commonwealth Bank executives were asked by federal parliament’s economics committee on 20 October why they lifted rates for existing interest-only loan customers in the wake of APRA’s directive, with the suggestion being that they were motivated by profit. However, this implication was rejected by the bank executives.

CORPORATES
AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. HOUSE OF REPRESENTATIVES STANDING COMMITTEE ON ECONOMICS, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIA. PRODUCTIVITY COMMISSION, MACQUARIE GROUP LIMITED – ASX MQG

Jobs market ‘a thing of beauty’ set to boost pay

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Original article by Jacob Greber
The Australian Financial Review – Page: 3 : 23-Oct-17

More than 300,000 jobs have been created in Australia during the last year, but Chris Richardson of Deloitte Access Economics forecasts that this will slow to less than 200,000 in the next 12 months. He also expects wages to begin increasing, while inflation will continue to rise at a slow pace over the next several years. Richardson adds that official interest rates are likely to remain low for some time, while a range of factors suggest that business investment will increase.

CORPORATES
DELOITTE ACCESS ECONOMICS PTY LTD, COMMONWEALTH SECURITIES LIMITED