MONETARY POLICY – AUSTRALIA

RBA douses talk of rate rises

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Original article by David Rogers, Adam Creighton
The Australian – Page: 17 & 25 : 5-Jul-17

Financial markets have priced in a nine per cent chance of a rise in Australia’s cash rate before the end of 2017 in the wake of the Reserve Bank’s July board meeting. The chances of a rate rise in the next 12 months have fallen from 84 per cent to 76 per cent. The central bank’s monetary policy statement was largely unchanged from May, although the Reserve Bank noted that a gradual strengthening of the Australia economy is likely. It also highlighted the need for the Australian dollar to remain low as the domestic economy completes its transition from the mining investment boom.

CORPORATES
RESERVE BANK OF AUSTRALIA, CAPITAL ECONOMICS LIMITED, JP MORGAN AUSTRALIA LIMITED, EUROPEAN CENTRAL BANK, BANK OF ENGLAND, BANK OF CANADA

Resource states recover to drive jobs growth

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Original article by David Uren
The Australian – Page: 6 : 16-Jun-17

The Australian Bureau of Statistics has reported that 42,000 new jobs were added to the economy in May 2017. Full-time jobs accounted for 80 per cent of the 141,000 new jobs in the past three months. New South Wales added 49,000 new jobs over the past six months, while Victoria added 41,000. Resources states Queensland and Western Australia both recorded improved jobs growth in the past six months. Kristina Clifton of the Commonwealth Bank said the recent good job figures means an interest rate cut is unlikely in the foreseeable future.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, RESERVE BANK OF AUSTRALIA

Outlook ‘tough’ as economy slows

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Original article by David Rogers
The Australian – Page: 17 & 27 : 8-Jun-17

Data from Credit Suisse shows that financial markets expect the cash rate to remain on hold in the next 12 months, following the release of the latest GDP data. The economy expanded by just 0.3 per cent in the March 2017 quarter, and year-on-year growth fell to an eight-year low of 1.7 per cent. The data will cast doubt on the Reserve Bank’s forecast of calendar year economic growth of 2.5-3.5 per cent. The Commonwealth Bank notes that the central bank will be adverse to easing the cash rate, as doing so could further inflate house prices.

CORPORATES
CREDIT SUISSE (AUSTRALIA) LIMITED, RESERVE BANK OF AUSTRALIA, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, ROYAL BANK OF CANADA, GOLDMAN SACHS AUSTRALIA PTY LTD, WESFARMERS LIMITED – ASX WES, TELSTRA CORPORATION LIMITED – ASX TLS, TOLL HOLDINGS LIMITED, GOODMAN GROUP – ASX GMG

Reserve takes hands off the growth lever

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Original article by David Rogers
The Australian – Page: 19 & 28 : 7-Jun-17

The Reserve Bank of Australia’s monetary policy statement for June 2017 notes that GDP growth is likely to have slowed in the March 2017 quarter. Paul Dales of Capital Economics says that while the central bank may be willing to overlook a temporary fall in GDP, a second successive quarter of weak GDP growth in June would be a concern for it. Dales expects the RBA to leave official interest rates unchanged at 1.5 per cent for the rest of 2017, after doing so in June.

CORPORATES
RESERVE BANK OF AUSTRALIA, CAPITAL ECONOMICS LIMITED, CITIGROUP PTY LTD, BARCLAYS BANK PLC, ABERDEEN ASSET MANAGEMENT LIMITED

Upbeat RBA signals end to cuts

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Original article by David Rogers
The Australian – Page: 27 : 3-May-17

The Reserve Bank of Australia’s decision to leave official interest rates unchanged on 2 May was widely expected. However, an upbeat outlook for the domestic and global economies has prompted speculation that there will be no more rate cuts in the current monetary policy cycle. RBA governor Philip Lowe noted that the resource sector’s exports are rising while higher commodity prices are resulting in an increase in national income.

CORPORATES
RESERVE BANK OF AUSTRALIA, JP MORGAN AUSTRALIA LIMITED, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, STANDARD AND POOR’S ASX 200 INDEX

Rate hikes deferred by slow US growth

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Original article by Myriam Robin
The Australian Financial Review – Page: 20 : 1-May-17

The Federal Reserve is tipped to leave interest rates on hold in May 2017, in the wake of GDP data showing that US economic growth slowed to a three-year low of 0.7 per cent in the March quarter. Some 70 per cent of futures traders expect the Federal Reserve to tighten monetary policy in June. The Reserve Bank of Australia is also expected to leave rates on hold in May, and Paul Brennan of Citigroup says the central bank’s revised quarterly forecasts are unlikely to be unduly affected by data showing that inflation is within its target range.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF AUSTRALIA, CITIGROUP PTY LTD, THINKMARKETS, REUTERS HOLDINGS PLC, SOCIETE GENERALE SA

Rise in inflation puts squeeze on households

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Original article by Jacob Greber
The Australian Financial Review – Page: 8 : 27-Apr-17

Financial markets believe there is little chance of an official interest rate cut in May 2017, following the release of CPI data for the March quarter. The headline inflation rate was 2.1 per cent year-on-year during the quarter, compared with 1.5 per cent previously. The inflation rate is now within the Reserve Bank’s target range of 2-3 per cent for the first time since late 2014. An increase in gas prices contributed to the rise in the inflation rate, which is now outpacing wages growth.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN BUREAU OF STATISTICS, STANDARD AND POOR’S ASX 200 INDEX, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB

Inflation will decide the rate debate

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Original article by Philip Baker
The Australian Financial Review – Page: 30 : 26-Apr-17

Investors will be awaiting the release of Australia’s CPI data for the March 2017 quarter, which may influence the timing of any change to monetary policy. The headline inflation rate is widely tipped to have risen by 2.2 per cent year-on-year, which would be the first time that inflation has been within the Reserve Bank’s target range of 2-3 per cent since the September 2014 quarter. However, the underlying inflation rate for the year to March is expected to be around 1.8 per cent.

CORPORATES
RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, WOOLWORTHS LIMITED – ASX WOW

Pause ahead of next Fed rate decision

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Original article by Timothy Moore
The Australian Financial Review – Page: 20 : 13-Mar-17

The US Federal Reserve is widely tipped to increase official interest rates in the week beginning 13 March 2017, and sharemarket trading volumes are likely to be subdued ahead of the monetary policy meeting. Stronger-than-expected growth in US jobs in February will strengthen the case for a rate rise. In contrast, most economists expect the Reserve Bank of Australia to leave the cash rate on hold in 2017. Meanwhile, Capital Economics forecasts that the iron ore price will fall to around $US45 per tonne.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, RESERVE BANK OF AUSTRALIA, CAPITAL ECONOMICS LIMITED, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG, THE GOLDMAN SACHS GROUP INCORPORATED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, ORGANISATION OF PETROLEUM EXPORTING COUNTRIES, OANDA AUSTRALIA PTY LTD, EUROPEAN CENTRAL BANK

Mixed views on dollar’s chance of hitting US80c

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Original article by David Rogers
The Australian – Page: 28 : 15-Feb-17

The Australian dollar rallied on 14 February 2017, benefiting from factors such as an upbeat business survey and a strong rise in the Chinese producer price index. The currency has reached a two-year high on a trade-weighted index basis, while it is within sight of the 2016 high of $US0.7835. However, the spot price of iron ore may not be sustainable at the current elevated level, while the gap between official interest rates in Australia and the US is likely to narrow as the Federal Reserve gears up to tighten monetary policy.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, STANDARD AND POOR’S ASX 200 INDEX, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, TELSTRA CORPORATION LIMITED – ASX TLS, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, JP MORGAN AUSTRALIA LIMITED