MONETARY POLICY – AUSTRALIA

Rates to stay low ‘for decades’: RBA

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Original article by Cliona O’Dowd
The Australian – Page: 19 & 29 : 14-Feb-20

Reserve Bank governor Philip Lowe has conceded that the coronavirus outbreak is likely to have a near-term impact on the economy, although he does not expect the outlook for 2020 to be significantly affected. He adds that the Australian economy will benefit from stimulus measures in China when the virus is brought under control. Lowe has also warned that climate change has ‘profound’ economic implications for Australia, while he says official interest rates may remain low for a long time.

CORPORATES
RESERVE BANK OF AUSTRALIA

RBA optimism boosts dollar

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Original article by David Rogers
The Australian – Page: 17 & 27 : 6-Feb-20

The odds of an official interest rate cut in the near-term have lengthened, with financial market pricing now implying that rates will be on hold until September. Meanwhile, the Australian dollar rebounded from its recent four-month low in response to a speech by Reserve Bank governor Philip Lowe on 5 February. He said the bushfires will have little impact on Australia’s overall economic growth in 2020, due to expenditure on recovery programs. However, he conceded that GDP growth will fall in the short-term. Lowe added that it is too soon to determine the likely economic impact of the coronavirus.

CORPORATES
RESERVE BANK OF AUSTRALIA

RBA keeps faith in the economy

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Original article by David Rogers
The Australian – Page: 17 & 24 : 5-Feb-20

Financial markets still expect the Reserve Bank of Australia to reduce the cash rate by June, after it left rates unchanged at 0.75 per cent on 4 February. The general consensus of economists is that the cash rate will remain on hold in March. Meanwhile, economists had expected the RBA to downgrade its economic growth forecasts for 2020 and 2021 in the wake of the bushfires and the coronavirus crisis, but these have been left at 2.75 per cent and 3 per cent respectively. The central bank also expects the unemployment rate to remain at around 5.1 per cent in 2020, before easing to less than five per cent in 2021.

CORPORATES
RESERVE BANK OF AUSTRALIA

Virus fears, rate uncertainty push $A to worst January since 2015

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Original article by Timothy Moore
The Australian Financial Review – Page: 20 : 3-Feb-20

The Australian dollar has shed 4.7 per cent so far in 2020, and factors such as the coronavirus and the prospect of further interest rate cuts could see the currency test a new post-global financial crisis low. The Reserve Bank of Australia is now widely tipped to reduce the cash rate in April, although Prashant Newnaha of TD Securities says a rate cut in March is still possible. The RBA is expected to downgrade its economic growth forecasts on 7 February, and National Australia Bank economist Kaixin Owyong says this means that further rate cuts will be necessary.

CORPORATES
RESERVE BANK OF AUSTRALIA, TD SECURITIES, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Consensus shifts to April cut after NAB relents

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Original article by Sarah Turner
The Australian Financial Review – Page: 30 : 31-Jan-20

The futures market is currently pricing in a 10.4 per cent chance that the Reserve Bank of Australia will reduce the cash rate on 4 February, compared with a 53 per cent chance in mid-January. National Australia Bank’s chief economist Alan Oster previously expected a rate cut in February, and while he still believes that the RBA should so, he says the next rate cut is now likely to be in April. The other major banks also expect an official interest rate cut in April.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RESERVE BANK OF AUSTRALIA

2020 survey: no lift in wage growth, no lift in economic growth and no progress on unemployment in year of low expectations

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Original article by Peter Martin
The Conversation – Page: Online : 29-Jan-20

A panel of 24 leading economists expects Australia’s economic growth to remain at or below two per cent in 2020. The average forecast is for growth of 1.9 per cent. The consensus of the economists is that the unemployment rate will remain above five per cent, while growth in wages will remain at around 2.2 per cent. The panel also expects the iron ore price to continue to fall, which will in turn see growth in Australians’ living standards slow to 2.4%. Meanwhile, there is general agreement among the economists that official interest rates will be cut just once in 2020 and the the Reserve Bank will not have to pursue quantitative easing.

CORPORATES
RESERVE BANK OF AUSTRALIA

Rate cut odds sink with jobless fall

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Original article by Adam Creighton
The Australian – Page: 2 : 24-Jan-20

Official data shows that Australia’s unemployment rate fell to 5.1 per cent in December, its lowest level since April. The economy shed 300 full-time jobs, although this was offset by the creation of 29,200 part-time jobs. The underemployment rate was steady at 8.3 per cent; the Australian Bureau of Statistics’ chief economist Bruce Hockman notes that underemployment has remained unchanged over the last year. Financial markets have responded to the latest jobs data by pricing in a 25 per cent chance that the Reserve Bank will reduce the cash rate in February.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, RESERVE BANK OF AUSTRALIA

Rate cuts not working says CBA economist

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Original article by Sarah Turner
The Australian Financial Review – Page: 27 : 22-Jan-20

National Australia Bank’s chief economist Alan Oster says the Reserve Bank needs to reduce official interest rates twice in 2020 in order to stimulate the economy. He expects the first rate cut to be in February. The Commonwealth Bank’s chief economist Michael Blythe also anticipates a rate cut in February, although he opposes such a move. Blythe contends that the three rate cuts in 2019 have not been effective, and they have resulted in outcomes such as a decline in consumer confidence.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

Pundits expect rate cut despite jobs positivity

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Original article by Matthew Cranston
The Australian Financial Review – Page: 3 : 9-Jan-20

Data from the Australian Bureau of Statistics shows that there was 1.6 per cent growth in job vacancies in the November quarter, in seasonally adjusted terms. Private sector job vacancies increased by 1.5 per cent, after declining in the two previous quarters. The figures also show that the number of available jobs rose to 239,400 in the year to November, compared with 235,100 in August. However, economics still expect the Reserve Bank of Australia to reduce the cash rate in February.

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

Rate cut odds shorten as bushfires hit economy

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Original article by Adam Creighton
The Australian – Page: 14 : 9-Jan-20

The prospect of an official interest rate cut in February has increased from 38 per cent to almost 60 per cent in the wake of the bushfires crisis. Katrina Ell of Moody’s Analytics says the odds of a rate cut had already been high, while she warns that agriculture, tourism, household spending and productivity are likely to be particularly hard hit by the disaster. Meanwhile, Capital Economics’ analysis suggests that a sharp fall in tourist numbers and farm production could reduce economic growth by about 0.1 per cent in the March quarter.

CORPORATES
MOODY’S ANALYTICS AUSTRALIA PTY LTD, CAPITAL ECONOMICS LIMITED, RESERVE BANK OF AUSTRALIA, GOLDMAN SACHS AUSTRALIA PTY LTD, CITIGROUP PTY LTD