INTEREST RATES – AUSTRALIA

‘Can’t rule out a further rate rise’: economists survey reveals caution

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Original article by Cecile Lefort
The Australian Financial Review – Page: 29 : 23-Apr-24

The consensus of economists polled by the Australian Financial Review is that the Reserve Bank will reduce the cash rate in November. However, financial market pricing suggests that the central bank will leave official interest rates unchanged for the rest of the year. Meanwhile, Ben Picton from Rabobank says another interest rate increase remains a possibility if inflation begins to accelerate. CPI data for the March quarter will be released on Wednesday.

CORPORATES
RESERVE BANK OF AUSTRALIA, RABOBANK AUSTRALIA LIMITED

Rate cut hopes dashed by US data

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Original article by Cecile Lefort
The Australian Financial Review – Page: 23 : 12-Apr-24

Financial markets have now priced in a 20 per cent chance that the US Federal Reserve will reduce the cash rate in June, compared with 58 per cent prior to the release of the latest inflation data. The figures showed that the inflation rate remains well above the central bank’s target of two per cent; core inflation rose by 0.4 per cent in March and 3.8 per cent in the year to March. Financial markets now expect just one rate cut in 2024. The US inflation data has also prompted Australian investors to scale back their expectations regarding the timing of monetary policy easing by the Reserve Bank.

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

CBA skimps on interest, makes an extra $1.7b

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Original article by James Eyers
The Australian Financial Review – Page: 12 : 10-Apr-24

The Commonwealth Bank of Australia disclosed in its half-year financial results that it held $825bn worth of deposits in December, including $284bn in savings accounts. Victor German from Macquarie believes that unlike rival banks, a higher proportion of CBA customers use higher-margin online saving accounts rather than bonus saver accounts. Online accounts initially pay a higher interest rate, but the ongoing base rate is typically much lower than the rates offered with bonus saver accounts. German contends that this allows CBA to pay out relatively less interest to customers, which boosts its net interest margin and adds about $1.7bn to its annual profit.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, MACQUARIE GROUP LIMITED – ASX MQG

Doubt builds RBA will cut rates in 2024

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Original article by Cecile Lefort
The Australian Financial Review – Page: 27 : 9-Apr-24

Financial markets are now pricing in two interest rate cuts in the US during 2024, while the Federal Reserve has previously flagged the likelihood of three rate cuts. The latest US non-farm payrolls data has strengthened the case for a rate cut to be delayed until later in the year, with the economy adding a higher-than-expected 303,000 jobs in March. There are heightened expectations that the Reserve Bank of Australia will also delay the timing of its first rate rise, with growing speculation that the central bank will leave the cash rate on hold until 2025.

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

RBA keeps rate rise in reserve

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 8 : 20-Mar-24

The Reserve Bank of Australia’s decision to leave the cash rate unchanged at 4.35 per cent on Tuesday had been widely expected. However, the RBA appears to have adopted a more neutral monetary policy stance in the statement it released after the two-day board meeting. It stated that the board is "not ruling anything in or out" with regard to the next interest rate move; in contrast, the RBA stated in February that a further increase in interest rates "cannot be ruled out". Financial markets have now fully priced in a 25 basis point reduction in the cash rate in September, as well as a strong chance of another rate cut in December.

CORPORATES
RESERVE BANK OF AUSTRALIA

Rate pause could lure home buyers back

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Original article by Nila Sweeney
The Australian Financial Review – Page: 30 : 20-Mar-24

Tim Lawless of CoreLogic says the Reserve Bank of Australia’s decision to leave the cash rate unchanged on Tuesday is likely to boost the confidence of prospective home buyers. He notes that there has tended to be a close relationship between consumer sentiment and the volume of home sales. Meanwhile, SQM Research MD Louis Christopher expects mortgage stress to continue to rise while interest rates remain high, while the number of distressed listings is also likely to rise.

CORPORATES
CORELOGIC AUSTRALIA PTY LTD, SQM RESEARCH PTY LTD, RESERVE BANK OF AUSTRALIA

Borrowers on slow march to mortgage cliff amid rollover

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Original article by Patrick Commins
The Australian – Page: 4 : 19-Mar-24

The Commonwealth Bank’s head of Australian economics Gareth Aird notes that the worst fears about the so-called ‘mortgage cliff’ have not eventuated. However, he adds that the shift from fixed to variable-rate home loans has had an impact on many households’ spending. Meanwhile, it is estimated that more than 250,000 households will transition to variable-rate home loans over the next 18 months; their mortgage repayments are set to rise sharply, even if the Reserve Bank does not increase the cash rate again.

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

House prices could jump 5pc: McGrath

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Original article by Campbell Kwan
The Australian Financial Review – Page: 31 & 34 : 20-Feb-24

Real estate group McGrath Limited has posted a 2023-24 interim statutory profit of $7.5m and underlying EBITDA of $4.8m. Meanwhile, CEO John McGrath says the prospect of interest rate cuts later in 2024 may boost prices at the lower end of Australia’s housing market by up to five per cent. He adds that interest rate rises have seen house prices in this segment of the market fall by around five per cent over the last 12 months. However, McGrath says prospective buyers of homes priced below $1m are likely to remain cautious about returning to the property market until interest rate cuts actually occur.

CORPORATES
McGRATH LIMITED – ASX MEA

Unemployment jumps to two-year high

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Original article by Patrick Commins
The Australian – Page: 5 : 16-Feb-24

Data from the Australian Bureau of Statistics shows that the nation’s official unemployment rate rose to 4.1 per cent in January, up from 3.9 per cent in December. The economy added just 500 jobs in January, and Bjorn Jarvis from the ABS says seasonal factors may have contributed to the larger-than-expected increase in the jobless rate. Treasurer Jim Chalmers says that although the labour market has been weakening, it remains very strong. Capital Economics economist Abhijit Surya in turn says the Reserve Bank is now likely to bring forward the first interest rate cut to around August rather than November.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, AUSTRALIA. DEPT OF THE TREASURY, CAPITAL ECONOMICS LIMITED, RESERVE BANK OF AUSTRALIA

Cooling inflation, stable rates may encourage buyers

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Original article by Nila Sweeney
The Australian Financial Review – Page: 29 & 30 : 7-Feb-24

Tim Lawless of CoreLogic says the Reserve Bank’s decision to leave the cash rate unchanged on Tuesday could prompt an upturn in house buying activity. He notes that house prices remain below their peaks in Sydney, Melbourne, Hobart, Darwin and the ACT; Lawless says that some buyers may capitalise on this to buy into the market before interest rates fall. Judo Bank’s chief economic adviser Warren Hogan says the rental housing market is still a major concern, while SQM Research MD Louis Christopher warns that rising rents could put upward pressure on inflation.

CORPORATES
CORELOGIC AUSTRALIA PTY LTD, JUDO BANK PTY LTD, SQM RESEARCH PTY LTD