MONETARY POLICY

Reserve Bank could end up cutting rates before the Fed

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Original article by Cecile Lefort
The Australian Financial Review – Page: 28 : 16-Apr-24

The US Federal Reserve has traditionally been the first central bank to cut interest rates when a monetary policy easing cycle begins. However, other countries have experienced a sharper slowdown in economic growth and inflation than the US; this has heightened expectations that the Federal Reserve will leave the cash rate on hold for longer than forecast. Some economists now expect the Fed to delay a rate cut until December, while there has also been speculation about another rate rise. Meanwhile, AMP says the Reserve Bank of Australia could potentially reduce official interest rates in June.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF AUSTRALIA, AMP LIMITED – ASX AMP

Rates must stay high ‘into next year’: Carney

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Original article by John Kehoe
The Australian Financial Review – Page: 4 : 14-Jun-23

Former Bank of England governor Mark Carney has downplayed the prospect that official interest rates will be reduced in the near-term. Carney has warned that interest rates in Australia and abroad will need to remain high until well into 2024 in order to bring inflation under control. He adds that a "very robust" banking system means that Australia is much better placed to cope with higher interest rates than some countries. The Reserve Bank of Australia has flagged further interest rate rises in coming months as it seeks to restore inflation to the target range of 2-3 per cent.

CORPORATES
BANK OF ENGLAND, RESERVE BANK OF AUSTRALIA

Rate cuts push investors into risky territory

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Original article by David Rogers
The Australian – Page: 25 : 10-Jul-19

Australia’s benchmark S&P/ASX 200 recorded its third-biggest loss for 2019 on 8 July, after gaining two per cent in the previous week and about 25 per cent in the last six months. The rally in global sharemarkets during 2019 has been driven by central banks’ shift towards a monetary policy easing bias. The downturn in official interest rates is prompting more investors to embrace higher-risk asset classes, which in turn can increase market risk.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, JP MORGAN AND COMPANY INCORPORATED, RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD

Risks build as central banks push on a string

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Original article by David Rogers
The Australian – Page: 27 : 26-Jun-19

There is a growing view that further monetary policy easing will do little to stimulate economic growth. Expectations of further interest rate cuts have seen Australia’s All Ordinaries Index gain 18 per cent so far in 2019. Matthew Brooks of Macquarie Group notes that the Australian sharemarket rose by an average of 12 per cent after the first interest rate cut in eight of the 11 easing cycles since 1971, while the S&P 500 was up at least 10 per cent a year. The other three easing cycles coincided with recessions.

CORPORATES
STANDARD AND POOR’S ASX ALL ORDINARIES INDEX, STANDARD AND POOR’S 500 INDEX, MACQUARIE GROUP LIMITED – ASX MQG, BANK OF AMERICA CORPORATION, MERRILL LYNCH AND COMPANY INCORPORATED, UNITED STATES. FEDERAL RESERVE BOARD, MORGAN STANLEY AUSTRALIA LIMITED

Low rates may trigger shock

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 3 : 6-Jul-18

Keeping official interest rates low for too long could have dire consequences, according to the Bank for International Settlements’ Committee on the Global Financial System. The committee warns that it could lead to a rise in inflation, which in turn would force central banks to hike up interest rates, resulting in a global recession. Under one scenario put forward by the committee, inflation could rise by two per cent, forcing central banks to lift short-term interest rates by 300 basis points. In Australia, this would result in economic growth falling to 0.5 per cent.

CORPORATES
BANK FOR INTERNATIONAL SETTLEMENTS, RESERVE BANK OF AUSTRALIA

US inflation stirs global rate rise bets

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Original article by John Kehoe
The Australian Financial Review – Page: 1 & 27 : 15-Jan-18

Thierry Albert Wizman of Macquarie Group notes that the Reserve Bank of Australia is the only major central bank among developed countries that has not flagged a rise in official interest rates. The Bank of Canada is widely tipped to tighten monetary policy again in mid-January, while the general consensus of economists is that US interest rates will rise in March. Meanwhile, New York Federal Reserve president William Dudley recently warned that factors such as the low unemployment rate in the US and the Trump administration’s tax cuts could potentially see the US economy "overheat".

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD, FEDERAL RESERVE BANK OF NEW YORK, BANK OF CANADA, EUROPEAN CENTRAL BANK, BANK OF JAPAN, FIS GROUP, BANK OF AMERICA CORPORATION, CAPITAL ECONOMICS LIMITED, LEHMAN BROTHERS INCORPORATED, RBC CAPITAL MARKETS, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT

Investors face nervous wait ahead of rate calls

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Original article by Patrick Commins
The Australian Financial Review – Page: 19 : 19-Sep-16

The upcoming monetary policy meetings of the US Federal Reserve and the Bank of Japan will be a focus for Australian investors in the week beginning 19 September 2016. Futures markets have priced in a 20 per cent chance that the Federal Reserve will increase the cash rate, and Paul Ashworth of Capital Economics says a rate rise in December is more likely. The minutes from the Reserve Bank of Australia will also be released, and Philip Lowe will appear before Parliament for the first time in his new role of RBA governor.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, BANK OF JAPAN, RESERVE BANK OF AUSTRALIA, CAPITAL ECONOMICS LIMITED, RESERVE BANK OF NEW ZEALAND, STANDARD AND POOR’S ASX 200 INDEX, WESTPAC BANKING CORPORATION – ASX WBC, AMP CAPITAL INVESTORS LIMITED, EUROPEAN CENTRAL BANK, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Aussie tests US76c as central banks ponder

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Original article by Vesna Poljak
The Australian Financial Review – Page: 20 : 14-Mar-16

Market watchers expect Australia’s benchmark S&P/ASX 200 to gain 0.8 per cent when trading resumes on 14 March 2016. The market is likely to benefit from a positive lead from overseas bourses and encouraging economic data from China. Investors will also be awaiting the outcome of the monetary policy meetings of the US and Japanese central banks in coming days, as well as the release of the latest jobs data in Australia.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, UNITED STATES. FEDERAL RESERVE BOARD, BANK OF JAPAN, EUROPEAN CENTRAL BANK, CREDIT SUISSE (AUSTRALIA) LIMITED, EURO STOXX 50 INDEX, ROUBINI GLOBAL ECONOMICS LLC, PEOPLE’S BANK OF CHINA, BLOOMBERG LP

Citi says 55pc chance of global recession

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Original article by Karen Maley
The Australian Financial Review – Page: 22 : 11-Sep-15

A new report from Citigroup’s chief economist Willem Buiter has raised the prospect of an emerging market-driven global recession. Buiter rates the chances of a global recession in the next two years at 55 per cent, warning that if the Chinese economy goes into recession it will have a flow-on effect on other emerging market economies. He adds that the limited scope for further interest rate cuts in developed economies may require central banks to consider more stimulus measures.

CORPORATES
CITIGROUP INCORPORATED