INTEREST RATES – AUSTRALIA

‘Job is not done’, says RBA boss

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Original article by Ronald Mizen
The Australian Financial Review – Page: 1 & 4 : 7-Feb-24

Investors have priced in a 41 per cent chance that the Reserve Bank of Australia will reduce the cash rate by June, compared with 53 per cent before the central bank left rates on hold at 4.35 per cent on Tuesday. RBA governor Michele Bullock says that while inflation fell to 4.1 per cent in the year to December, it remains too high for the central bank to begin easing monetary policy. She adds that the RBA will not begin doing so until it is confident inflation that will sustainably return to the target range of 2-3 per cent target; it does not expect this to happen until late 2025. Bullock also cautioned that further interest rate increases cannot be ruled out.

CORPORATES
RESERVE BANK OF AUSTRALIA

RBA rate cuts a double-edged sword for first-home buyers

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Original article by Matt Bell
The Australian – Page: 19 : 6-Feb-24

The Reserve Bank of Australia is widely tipped to leave the cash rate unchanged at 4.35 per cent on Tuesday. Sally Tindall of RateCity says the key focus will be on whether the central bank removes its tightening bias. Meanwhile, money markets now expect the RBA to reduce the cash rate by 25 per cent in both August and November. Ray White’s chief economist Nerida Conisbee notes that interest rate cuts will increase the borrowing power of first home buyers, but can also be expected to further boost house prices.

CORPORATES
RESERVE BANK OF AUSTRALIA, RATECITY PTY LTD, RAY WHITE GROUP

Investors caution markets still too bullish on rates

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Original article by Cecile Lefort
The Australian Financial Review – Page: 21 : 24-Jan-24

Financial markets have scaled back their expectations of interest rate cuts from the Reserve Bank of Australia in 2024; the RBA is now expected to reduce the cash rate by 37 basis points over the year, compared with expectations of a 55 basis point cut earlier in January. Tim Van Klaveren of UBS expects two rate cuts in 2024, while Matt Wacher from Morningstar anticipates three rate cuts in response to an economy that he expects to slow quickly. Meanwhile, financial markets have now fully priced in a US interest rate cut in June.

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RESERVE BANK OF AUSTRALIA, UBS HOLDINGS PTY LTD, MORNINGSTAR PTY LTD

Economists warn of unintended fallout from RBA overhaul

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Original article by Cecile Lefort
The Australian Financial Review – Page: 21 : 17-Jan-24

Economists polled by The Australian Financial Review have expressed some reservations with regard to how the Reserve Bank will communicate monetary policy decisions under its new structure. The RBA’s mew Monetary Policy Board will be responsible for setting interest rates; it will publish details of how the board voted on rate decisions, but not the voting records of each board member. Economists contend amongst other things that not diclosing these votes could potentially give rise to speculation of dissension amongst board members when this does not exist.

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RESERVE BANK OF AUSTRALIA

Jobless rate fears halt RBA rate increases

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Original article by Patrick Commins
The Australian – Page: 2 : 20-Dec-23

The minutes of the Reserve Bank of Australia’s board meeting for December show that it considered whether to increase the cash rate for a second successive month. The board noted the possibility that the unemployment rate could rise higher than originally anticipated due to the central bank’s push to rein in the inflation rate. The board reiterated that it will do whatever is necessary to return inflation to its target range within a reasonable timeframe. Gareth Aird from the Commonwealth Bank expects three official interest rate cuts in 2024, beginning in September.

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

Rates on hold, as RBA chief flags more rises

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Original article by Patrick Commins
The Australian – Page: 4 : 6-Dec-23

Reserve Bank of Australia governor Michele Bullock has reiterated that returning inflation to the target range of 2-3 per cent within a reasonable timeframe is still the RBA board’s priority. She added that the board will do whatever is necessary to achieve that outcome, raising the prospect that there may be further official interest rate increases in 2024. The RBA’s decision to leave the cash rate on hold at 4.35 per cent on Tuesday had been widely expected, after five interest rate increases during the calendar year. Treasurer Jim Chalmers has welcomed the decision, noting that Australians did not need another rate rise before Christmas. He adds that encouraging progress is being made in the fight against inflation.

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RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY

RBA poised to deliver pre-Christmas cheer to hard-pressed borrowers

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Original article by Shane Wright
The Age – Page: Online : 5-Dec-23

Financial markets and economists generally expect the Reserve Bank of Australia to leave the cash rate unchanged at 4.35 per cent on Tuesday. The central bank has increased official interest rates by 1.25 percentage points during calendar 2023, and an end-of-year pause will be welcomed by Australians with home loans. Meanwhile, data from the ANZ Bank and Indeed suggests that the series of rate rises is starting to impact on the labour market, with the number of job advertisements falling by 4.6 per cent in November. Separate data supports the view that inflation is easing; the average price of unleaded petrol recently fell to its lowest level since August.

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RESERVE BANK OF AUSTRALIA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, INDEED INCORPORATED

RBA won’t lift rates again, says OECD

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Original article by Michael Read
The Australian Financial Review – Page: 4 : 30-Nov-23

The latest CPI data has strengthened the case for leaving Australia’s official interest rates on hold in December, with the annual inflation rate falling from 5.6 per cent in September to just 4.9 per cent in October. Meanwhile, the OECD expects the cash rate to remain on hold at 4.35 per cent until the September 2024 quarter, while the Paris-based organisation forecasts that a gradual easing of monetary policy will see it fall to 3.6 per cent by the end of 2025. Meanwhile, the OECD expects cost-of-living pressures to reduce Australia’s GDP growth from 1.9 per cent in 2023 to just 1.4 per cent in 2024. It also anticipates that inflation will fall below three per cent by 2025.

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ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

Households coping well, says Bullock

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 6 : 29-Nov-23

Reserve Bank of Australia governor Michele Bullock addressed an international conference in Hong Kong on Tuesday. She told the audience – which included a number of central bankers – that Australian households and businesses are in a "pretty good position", despite the "political noise" regarding the RBA’s 13 interest rate increases since May 2022. Bullock also conceded that the RBA’s goal of returning inflation to its target range of 2-3 per cent by the end of 2025 is "very uncertain". Her predecessor Philip Lowe told the conference that he is concerned that central banks may not yet have lifted interest rates far enough to rein in inflation.

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RESERVE BANK OF AUSTRALIA

Bullock: Pay growth risks higher interest rates

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 4 : 22-Nov-23

Reserve Bank of Australia governor Michele Bullock has warned that reducing the inflation rate is the "crucial challenge" facing the domestic economy over the next several years. She also said that rapidly rising labour costs are another challenge for the RBA in restoring inflation to its target range of 2-3 per cent, and stressed that the recent growth in wages will not be sustainable unless productivity improves. Recent data shows that annual wages growth reached a 14-year high of four per cent in the September quarter. Meanwhile, the minutes of the RBA’s board meeting for November show that economic data will determine whether monetary policy is further tightened. Financial markets have priced in a five per cent chance of an interest rate rise in December.

CORPORATES
RESERVE BANK OF AUSTRALIA