MONETARY POLICY – AUSTRALIA

RBA ‘will do what’s necessary’, but end of rate rises in sight

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Original article by Patrick Commins
The Australian – Page: 1 & 2 : 8-Mar-23

Reserve Bank of Australia governor Philip Lowe adopted a more dovish tone on Tuesday following the latest 25 basis point increase in the cash rate, to 3.6 per cent. He said the RBA board expects that further tightening of monetary policy will be needed to ensure that inflation returns to the target range of 2-3 per cent. He added that the board is of the view that the current period of high inflation will be temporary. Lowe had stated after the RBA’s February board meeting that "further increases in interest rates will be needed over the months ahead". Josh Williamson of Citigroup says this change in tone suggests that the end of rate rises is in sight, and there could potentially be just one more in the current monetary policy tightening cycle. The cash rate is now at its highest level since May 2012.

CORPORATES
RESERVE BANK OF AUSTRALIA, CITIGROUP PTY LTD

Inflation: Act now or hurt like 1990s

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Original article by Geoff Chambers, Ewin Hannan, Joyce Moullakis
The Australian – Page: 1 & 4 : 7-Mar-23

The Reserve Bank of Australia is widely tipped to announce a 10th consecutive increase in the cash rate on Tuesday, and some economists believe that there is potential for up to four rate rises by June. Westpac’s chief economist Bill Evans says households face a tough time in coming months, and they must expect more rate rises. Evans warns that it is "now or never" if the RBA is to get inflation under control, and he contends that failing to do so would risk the prospect of interest rates approaching the levels that were seen in the 1990s. ACTU secretary Sally McManus has called for a pause in interest rate rises, arguing that Australians are "seriously hurting" and the rate rises to date have achieved the RBA’s goal of running down households’ savings.

CORPORATES
RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, ACTU

RBA forecast to lift rate for 10th straight time

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Original article by Cecile Lefort
The Australian Financial Review – Page: 23 : 6-Mar-23

Futures pricing suggests that Australian equities will gain 0.9 per cent when the market opens on Monday. The local bourse is expected to be bolstered by a positive lead from Wall Street, which rallied in response to the latest US economic data. Meanwhile, financial markets have priced in a 96 per cent chance that the Reserve Bank of Australia will increase the cash rate by 25 basis points to 3.6 per cent on Tuesday. However, most economists now expect the cash rate to peak at 3.85 per cent in the June quarter.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, RESERVE BANK OF AUSTRALIA

RBA’s rate rises to run for months

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Original article by Patrick Commins
The Australian – Page: 1 & 4 : 8-Feb-23

Reserve Bank of Australia governor Philip Lowe has signalled that further official interest rate increases are likely in order to bring inflation under control. The RBA increased the cash rate by 25 basis points to 3.35 per cent on Tuesday, in a move that was widely expected. Many economists now forecast that the cash rate will peak at 3.85 per cent in April, compared with previous expectations of 3.6 per cent. Lowe has emphasised that the RBA will do "what is necessary" to return inflation to its target range of 2-3 per cent. Lowe has conceded that the RBA’s preferred measure of underlying inflation is higher than expected at 6.9 per cent. Meanwhile, new data shows that Australia’s trade surplus fell to $12.2bn in December.

CORPORATES
RESERVE BANK OF AUSTRALIA

Retail slump won’t stop RBA rate rise

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Original article by Ronald Mizen
The Australian Financial Review – Page: 1 & 4 : 1-Feb-23

Data from the Australian Bureau of Statistics shows that retail sales fell by 3.9 per cent in December. This followed 11 consecutive months of growth. Monthly sales fell by $1.4bn to $34.4bn in seasonally adjusted terms in December. Treasurer Jim Chalmers says the downturn in retail sales reflects the impact of rising interest rates on household budgets. However, some economists have downplayed the significance of the latest retail data, arguing that the Black Friday sales in late November affected the seasonally-adjusted figures. The Reserve Bank is still widely tipped to increase the cash rate by 25 basis points in February.

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

Australia’s softening inflation unlikely to spell an end to interest rate hikes

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Original article by Peter Hannam
The Guardian Australia – Page: Online : 25-Jan-23

The Australian Bureau of Statistics will release inflation data for the December quarter on Wednesday. Many economists expect the annual headline inflation rate to have peaked at 7.5 per cent in the quarter, compared with 7.3 per cent in the previous three months. The trimmed mean is the Reserve Bank of Australia’s preferred measure of inflation; the general consensus of economists is that this will be 6.4 per cent in the December quarter, compared with 6.1 per cent in the previous quarter. However, the ANZ Bank expects a headline inflation rate of 7.7 per cent and a trimmed mean of 6.7 per cent. The bank contends that the RBA is likely to increase the cash rate three times by May, given that both measures will still be well above its target range of 2-3 per cent.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, RESERVE BANK OF AUSTRALIA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

RBA’s ultra-low rate loans barely boosted lending

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Original article by Ronald Mizen
The Australian Financial Review – Page: 2 : 14-Dec-22

The Reserve Bank of Australia’s approach to monetary policy during the COVID-19 pandemic is continuing to attract scrutiny. RBA analysts have undertaken a review of the central bank’s Term Funding Facility, which offered ultra-low interest loans to banks with the aim of providing support to businesses during the pandemic-induced economic downturn. The analysts concluded that there was little evidence that the TFF had increased overall lending, particularly to the small and medium enterprise sector.

CORPORATES
RESERVE BANK OF AUSTRALIA

Inflation tipped to rise to highest level in 32 years

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Original article by Emma Rapaport
The Australian Financial Review – Page: 29 : 29-Nov-22

The latest monthly inflation data will be released on Wednesday. Catherine Birch from the ANZ Bank expects the data to show that the headline inflation rate rose from 7.3 per cent in September to 7.8 per cent in October. Birch also forecasts that the Reserve Bank’s preferred measure of trimmed mean inflation will rise from 5.4 per cent to 5.9 per cent. The ANZ expects the quarterly headline inflation rate to peak at eight per cent in the final three months of 2022 and remain above the central bank’s target range of 2-3 per cent until the end of 2024. It also anticipates that the Reserve Bank will begin to ease monetary policy in November 2024.

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

NZ Reserve Bank nails our RBA’s failure

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Original article by Terry McCrann
Herald Sun – Page: 49 : 24-Nov-22

Reserve Bank of Australia governor Philip Lowe has stated that wage outcomes must be consistent with the return of inflation to the central bank’s target range of 2-3 per cent. Increasing wages in line with the inflation rate would inevitably result in large-scale job losses and further boost inflation. Allowing inflation to remain well above the target range for too long would also heighten the risk of a wage-price spiral. The Reserve Bank of New Zealand recognises these risks; its cash rate was increased by 75 basis points on Wednesday, and it seriously considered a one per cent increase. In contrast, the RBA increased the cash rate by just 25 basis points in November, despite the inflation rate in both countries being nearly identical. NZ’s cash rate is now 4.25 per cent, but Australia’s cash rate will still be just 3.1 per cent if – as expected – the RBA announces a 25 basis point increase in December.

CORPORATES
RESERVE BANK OF AUSTRALIA, RESERVE BANK OF NEW ZEALAND

Economists tip supersized Cup day rate rise

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Original article by Ronald Mizen
The Australian Financial Review – Page: 11 : 28-Oct-22

Westpac’s chief economist Bill Evans expects the Reserve Bank of Australia to increase the cash rate by 50 basis points in November, in response to the latest inflation data. Westpac now anticipates that official interest rates will peak at 3.85 per cent, a view shared by the Commonwealth Bank. National Australia Bank and ANZ in turn expect interest rates to peak at 3.6 per cent and 3.1 per cent respectively. Meanwhile, financial markets have priced in a 25 basis point increase in November.

CORPORATES
WESTPAC BANKING CORPORATION – ASX WBC, RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ