Rate cut may lead to riskier investing

Original article by Sarah Turner
The Australian Financial Review – Page: 31 : 13-Jun-19

Anthony Doyle of Fidelity International says Australian savers are likely to seek out higher-yielding and higher-risk investments following the Reserve Bank’s decision to reduce the cash rate to a new low of 1.25 per cent. He notes that there was a similar trend in the UK following the global financial crisis, with Britain’s cash rate reaching a low of just 25 basis points. Doyle also expects the search for yield to bolster Australia’s corporate bond market.

CORPORATES
FIDELITY INTERNATIONAL PTY LTD, RESERVE BANK OF AUSTRALIA, M&G INVESTMENT MANAGEMENT LIMITED

RBA warns rates may go lower to drive jobs

Original article by Michael Roddan
The Australian – Page: 2 : 13-Jun-19

The Reserve Bank of Australia recently downwardly revised its estimate of full employment from 5.25 per cent to 4.5 per cent. Assistant governor Luci Ellis has indicated that the non-accelerating inflation rate of unemployment may in fact be as low as 3.5 per cent, adding that the central bank may have to keep reducing the cash rate until the unemployment rate reaches this level. Australia’s official unemployment rate is currently about five per cent.

CORPORATES
RESERVE BANK OF AUSTRALIA

Banks not passing on cut nothing new: Treasury

Original article by Matthew Cranston, James Eyers
The Australian Financial Review – Page: 4 : 7-Jun-19

Westpac and ANZ have been criticised for withholding part of the Reserve Bank’s official interest rate cut. The central bank has cut the cash rate a total of 19 times since 2008, and analysis by the Treasury shows that there have been 13 occasions when at least one of the four major banks failed to pass on the full rate. The banks have also reduced their rates by a higher margin than the official interest rate cut on several occasions since the global financial crisis.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA. DEPT OF THE TREASURY

Rate cut to spur ASX to even greater heights

Original article by Sarah Turner
The Australian Financial Review – Page: 17 & 30 : 7-Jun-19

Australia’s benchmark S&P/ASX 200 has gained more than12 per cent so far in 2019, including a one per cent gain since the Reserve Bank reduced the cash rate on 4 June. The first interest rate cut in almost three years may provide the catalyst for further sharemarket gains, particularly given the higher yields at present from equities than bonds and cash products such as term deposits. There is also growing expectations of further monetary policy easing before the end of 2019.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, RESERVE BANK OF AUSTRALIA, AMP CAPITAL INVESTORS LIMITED, JP MORGAN AUSTRALIA LIMITED

Ex-RBA deputy queries rate cut

Original article by John Kehoe
The Australian Financial Review – Page: 1 & 6 : 6-Jun-19

Stephen Grenville was the Reserve Bank of Australia’s deputy governor when it introduced inflation targeting in 1996. However, he has questioned whether the inflation target of 2-3 per cent is still necessary, as well as the central bank’s decision to reduce the cash rate to a record low of 1.25 per cent. Grenville argues that there needs to be more focus on the role of fiscal policy in stimulating the economy. Inflation has been below the RBA’s target range for several years, but governor Philip Lowe says there is no need for any changes to the monetary policy framework at present.

CORPORATES
RESERVE BANK OF AUSTRALIA, LOWY INSTITUTE FOR INTERNATIONAL POLICY, OUTLOOK ECONOMICS, AUSTRALIA. DEPT OF THE TREASURY, INTERNATIONAL MONETARY FUND

Banks defy the Treasurer, RBA

Original article by Matthew Cranston
The Australian Financial Review – Page: 1 & 4 : 5-Jun-19

Federal Treasurer Josh Frydenberg has criticised the ANZ Bank for reducing its variable mortgage interest rates by just 0.18, after the Reserve Bank of Australia cut the cash rate by 0.25 per cent to a record low of 1.25 per cent. Westpac has cut its variable rates by 0.20 per cent, while National Australia Bank and the Commonwealth Bank have passed the central bank’s full rate cut on to customers. RBA governor Philip Lowe also says the major banks should reduce their mortgage rates by the full amount, given that their wholesale funding costs have fallen significantly.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY, JP MORGAN AUSTRALIA LIMITED

Banks told: hand over RBA cut

Original article by Matthew Cranston
The Australian Financial Review – Page: 1 & 4 : 4-Jun-19

The Reserve Bank of Australia is widely expected to reduce official interest rates from 1.50 per cent to 1.25 per cent on 4 June. A cut in rates would mean an end to the longest period of unchanged interest rates in the history of the RBA. Treasurer Josh Frydenberg, who has met with the banks in recent days to discuss issues such as interest rates and the federal government’s proposed securitisation fund, has called on them to pass on any rates cut in fall. However, former RBA board member Warwick McKibbin has urged it not to cut rates, while Don Hamson from Plato Investment Management says any cut in rates would result in increased demand for dividend-paying shares.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, PLATO INVESTMENT MANAGEMENT LIMITED, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, FRANKLIN TEMPLETON ASSET MANAGEMENT LIMITED, CORELOGIC AUSTRALIA PTY LTD, JP MORGAN AUSTRALIA LIMITED, DELOITTE TOUCHE TOHMATSU LIMITED

Business wary of RBA rate cut

Original article by Patrick Durkin, Matthew Cranston
The Australian Financial Review – Page: 1 & 6 : 3-Jun-19

Business leader Tony Shepherd has urged the Reserve Bank to leave official interest rates unchanged in June, arguing that it should wait for the impact of the federal election to fully flow through to the economy. Coca-Cola Amatil CEO Alison Watkins warns that a rate cut in June would leave the central bank with limited "firepower" in the event of a downturn in the economy. However, MYOB Group CEO Tim Reed notes that small businesses generally benefit from interest rate cuts.

CORPORATES
RESERVE BANK OF AUSTRALIA, COCA-COLA AMATIL LIMITED – ASX CCL, MYOB GROUP LIMITED, HSBC AUSTRALIA HOLDINGS PTY LTD, ENERGYAUSTRALIA PTY LTD, VIRGIN AUSTRALIA HOLDINGS LIMITED – ASX VAH, GRAINCORP LIMITED – ASX GNC, QANTAS AIRWAYS LIMITED – ASX QAN, GREATER WESTERN SYDNEY FOOTBALL CLUB, SYDNEY CRICKET GROUND, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, UNIVERSITY OF TECHNOLOGY, SYDNEY, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIAN LABOR PARTY

RBA cash rate below 1pc tipped

Original article by Matthew Cranston
The Australian Financial Review – Page: 8 : 23-May-19

Financial markets have priced in a 25 per cent chance that the Reserve Bank of Australia will reduce the cash rate three times by the end of 2019. However, economists are sceptical as to whether a cash rate of one per cent or less would provide sufficient economic stimulus to meet the central bank’s revised growth forecast of 2.75 per cent. Commonwealth Bank economists say that an interest rate cut in June would help to stabilise house prices and stimulate the economy in the second half of the year.

CORPORATES
RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, JP MORGAN AUSTRALIA LIMITED, IFM INVESTORS PTY LTD, ERNST AND YOUNG, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Economy needs rate cuts: Lowe

Original article by David Rogers
The Australian – Page: 17 & 24 : 22-May-19

Financial markets have priced in a 92 per cent chance that the Reserve Bank of Australia will reduce the cash rate in June, in response to comments made by governor Philip Lowe. He used an Economics Society speech on 21 May to argue that two interest rate cuts are needed to prevent an increase in unemployment and to lift inflation to the central bank’s target range. Financial markets also expect a second interest rate cut by November, and Westpac economist Bill Evans forecasts that the RBA will do so in August.

CORPORATES
RESERVE BANK OF AUSTRALIA, ECONOMICS SOCIETY OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, apra use AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, STANDARD AND POOR’S ASX 200 INDEX, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AMP CAPITAL INVESTORS LIMITED, JP MORGAN AUSTRALIA LIMITED, NOMURA AUSTRALIA LIMITED, BARCLAYS BANK PLC, RBC CAPITAL MARKETS