INTEREST RATES – AUSTRALIA

Traders gird for dangerous 48 hours

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Original article by Sarah Jones
The Australian Financial Review – Page: 27 : 31-Jul-24

Bond market pricing suggests that there is about a 20 per cent chance that the Reserve Bank of Australia will increase the cash rate in August. The chances of a rate rise in September are now 31 per cent. Quarterly CPI data to be released on Wednesday is likely to be a key factor in the RBA’s monetary policy decision; the central bank’s preferred measure of trimmed mean inflation is tipped to ease from one per cent to 0.9 per cent. Investors will also be keenly awaiting the outcome of the US Federal Reserve’s two-day policy meeting, and signs that rate cuts are on its agenda in coming months.

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

More RBA rate rises unwarranted as Yarra cuts growth outlook

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Original article by Ronald Mizen
The Australian Financial Review – Page: 4 : 9-Jul-24

Yarra Capital’s chief economist Tim Toohey has downgraded his growth forecast for the Australian economy to just 1.75 per cent in 2024-25, compared with his previous expectations of 2.25 per cent growth. In contrast, the Reserve Bank anticipates growth of 2.1 per cent in the current financial year, while the federal government’s 14 May budget papers show that the Treasury expects the economy to expand by two per cent. Toohey says factors such as a slowdown in employment growth among non-migrant workers and plans to curb the migrant intake could dampen economic growth, and in turn weaken the case for a further tightening of monetary policy.

CORPORATES
YARRA CAPITAL PARTNERS PTY LTD, RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY

Financial stress through the roof as interest rate hikes come home to roost

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Original article by David Taylor
abc.net.au – Page: Online : 9-Jul-24

The National Debt Line received 145,166 calls in the 2023-24 financial year, the highest number of calls in four years. Financial counsellor Mike Dunkley says he is experiencing his busiest time since he has been with the NDL, with calls increasing over the latter half of 2023 as the impact of interest rate increases began to take their toll. Dunkley says that most of the calls that the NDL gets are about mortgages and rents, while it has also been getting some calls about the Australian Taxation Office in recent months. For his part, Financial Counselling Australia CEO Peter Gartlan notes that the demand on financial counsellors has gone through the roof in recent times

CORPORATES
AUSTRALIAN TAXATION OFFICE, FINANCIAL COUNSELLING AUSTRALIA LIMITED

Treasurer on the defensive as RBA raises alarm over big-spending budgets

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Original article by Patrick Commins
The Australian – Page: 1 & 4 : 19-Jun-24

Reserve Bank governor Michele Bullock says the central bank’s board is prepared to "do what is necessary" to restore inflation to its target range by mid-2025. The RBA’s decision on Tuesday to leave the cash rate unchanged at 4.35 per cent had been widely expected by economists. Bullock has indicated that the board had considered a rate rise, while a rate cut had not been on the agenda; she notes that the inflation figures for April were "a bit higher than expected". The RBA also expressed concern in its monetary policy statement that cost-of-living relief and other spending measures in federal and state budgets may fuel inflation. However, Treasurer Jim Chalmers says the government’s strategy is "the right one".

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY

Outlier economist predicts two rate rises this year

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Original article by Matt Bell
The Australian – Page: 15 : 18-Jun-24

Economists at three of Australia’s four major banks are of the view that interest rates have peaked and the Reserve Bank of Australia will begin easing monetary policy in November. Other economists expect the first rate cut in 2025. However, Judo Bank’s economic adviser Warren Hogan expects the RBA to increase the cash rate in both August and November. He says the central bank’s board will be concerned about recent economic data such as higher-than-expected jobs growth in May, which suggests that inflation will remain above the target range. He adds that tax cuts and governments’ cost-of-living relief may add to inflation.

CORPORATES
JUDO BANK PTY LTD, RESERVE BANK OF AUSTRALIA

Slowing economy puts RBA rate cut on cards: Minack

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Original article by Jonathan Shapiro
The Australian Financial Review – Page: 25 : 13-Jun-24

Market strategist Gerard Minack says monetary policy in Australia is "very restrictive" at present, noting that official interest rates are still lower than comparable countries. Minack addressed the Morgan Stanley Australia summit on Wednesday, stating that he expects the Reserve Bank to reduce the cash rate later in 2024 or in early 2025. Meanwhile, Morgan Stanley economist Chris Read said the central bank could increase the cash rate if inflation rises again. Market traders have fully priced in the cash rate remaining on hold until the end of 2024, and a rate cut in May 2025.

CORPORATES
MORGAN STANLEY AUSTRALIA LIMITED, RESERVE BANK OF AUSTRALIA

RBA rate rise still likely even after wage review

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Original article by Cecile Lefort
The Australian Financial Review – Page: 27 : 4-Jun-24

Su-Lin Ong from RBC Capital Markets says the Reserve Bank of Australia will most likely have welcomed the Fair Work Commission’s decision to limit the minimum wage increase to 3.75 per cent on Monday. Financial markets had been concerned that the minimum wage would be increased by at least four per cent, while economists had warned that a rise of this size would have complicated the RBA’s efforts to restore inflation to its target range. Bond traders have now priced in a 14 per cent chance of an interest rate rise by the end of 2024, while they have fully priced in a rate cut by August 2025.

CORPORATES
RBC CAPITAL MARKETS, AUSTRALIA. FAIR WORK COMMISSION, RESERVE BANK OF AUSTRALIA

Rates pressure, costs keep lid on retail sales

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Original article by Patrick Commins
The Australian – Page: 4 : 29-May-24

Data from the Australian Bureau of Statistics shows that retail sales rose by just 0.1 per cent in April, after falling by 0.4 per cent in March. The seasonally adjusted data also shows that retail sales increased by 1.3 per cent year-on-year in April. UBS chief economist George Tharenou say younger Australians and people with mortgages are primarily reducing their spending, while this is being offset by increased expenditure by older people and households that have no debt. Tharenou adds that the ongoing weakness in retail sales will make it less urgent for the Reserve Bank to increase the cash rate; he still expects an interest rate cut in February.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, UBS HOLDINGS PTY LTD

Inflation may drop below 3pc by July

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Original article by Patrick Commins
The Australian – Page: 5 : 28-May-24

Monthly inflation data to be released on Wednesday is expected to show that consumer price growth was steady at 3.5 per cent in the year to April. Commonwealth Bank economist Stephen Wu says energy subsidies in recent federal and state budgets will flow through to consumers in July and August, and they may be sufficient to reduce consumer price growth by 0.6 per cent in those months; this would restore inflation to the Reserve Bank’s target range of 2-3 per cent on a quarterly basis well ahead of its forecast of late 2025. However, CBA senior economist Belinda Allen says this would probably not prompt the RBA to reduce the cash rate, as it is likely to focus on underlying inflationary pressures.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESERVE BANK OF AUSTRALIA

Rate rise still priced in despite Chalmers’ forecast

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Original article by Alex Gluyas
The Australian Financial Review – Page: 28 : 14-May-24

AMP’s chief economist Shane Oliver is amongst those who have questioned the federal government’s forecast that the headline inflation rate will fall to 3.5 per cent by the end of June. He notes that it is uncertain as to how cost-of-living relief in the budget will impact on inflation, given that the financial year ends in about six weeks. Paul Bloxham of HSBC in turn says the budget is likely to boost the Reserve Bank’s preferred measure of core inflation, which is likely to rule out an interest rate cut in 2024. Meanwhile, futures traders still expect the central bank to increase the cash rate this year.

CORPORATES
AMP LIMITED – ASX AMP, HSBC HOLDINGS PLC, RESERVE BANK OF AUSTRALIA