MONETARY POLICY – AUSTRALIA

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

Confidence in property hits two-year high

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Original article by Matthew Cranston
The Australian Financial Review – Page: 7 : 12-Jan-17

A survey by the ANZ Bank and the Property Council of Australia has found that confidence in the nation’s residential and commercial property markets has risen to its highest level in two years. The Property Confidence Index has risen by two points to 130 points for the March 2017 quarter, and Western Australia is the only state that has not recorded a rise in confidence. Interest rate expectations over the next 12 months have also risen significantly, particularly nationally and in New South Wales.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, PROPERTY COUNCIL OF AUSTRALIA LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, UNITED STATES. FEDERAL RESERVE BOARD, AUSTRALIAN BUILDING AND CONSTRUCTION COMMISSION

Split emerges on interest rates forecast

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Original article by Jessica Sier
The Age – Page: 20 : 22-Dec-16

Westpac and ANZ Bank economists expect Australia’s cash rate to remain unchanged in 2017, while National Australia Bank suggests that there is potential for two rate cuts. Financial markets have responded to the release of the minutes of Reserve Bank’s December 2016 board meeting by lifting the chances of a rate rise in 2017 from 40 per cent to 55 per cent. The minutes show that the central bank is concerned about the residential property market and the level of household debt.

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

US hike won’t deter the RBA from following suit

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Original article by David Rogers
The Australian – Page: 28 : 14-Dec-16

The US Federal Reserve’s monetary policy statement is likely to attract more scrutiny than the outcome of its December 2016 meeting, as it is generally expected to lift the cash rate by 25 basis points. Meanwhile, the fall in National Australia Bank’s latest business conditions survey may strengthen the case for the Reserve Bank of Australia to further reduce official interest rates, particularly in the wake of the higher-than-expected decline in GDP growth for the September quarter.

CORPORATES
UNITED STATES. FEDERAL RESERVE BOARD, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL OPEN MARKET COMMITTEE, FEDERAL RESERVE BANK OF ST LOUIS, JP MORGAN AUSTRALIA LIMITED

Alarm as economic growth stalls

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Original article by David Rogers
The Australian – Page: 19 & 32 : 8-Dec-16

The Australian economy expanded by just 1.8 per cent in the year to September 2016. The Federal Government’s upcoming mid-year Budget update is likely to include a downgraded 2016 economic growth forecast, which was tipped to be 3.25 per cent in the Budget in May. However, Paul Bloxham of HSBC notes that GDP has not fallen for two consecutive quarters since 1991. Nevertheless, the national accounts for the September quarter may strengthen the case for further official interest rate cuts.

CORPORATES
HSBC AUSTRALIA HOLDINGS PTY LTD, RESERVE BANK OF AUSTRALIA, AUSTRALIAN BUREAU OF STATISTICS, LEHMAN BROTHERS INCORPORATED, MACQUARIE GROUP LIMITED – ASX MQG, WESTPAC BANKING CORPORATION – ASX WBC

OECD urges interest rate hikes in 2017

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 4 : 29-Nov-16

The OECD states in its latest global economic outlook that the Reserve Bank of Australia is likely to begin increasing official interest rates in late 2017. It also argues that the prospect of rate rises in the US will allow the RBA to act without any concern about putting upward pressure on the Australian dollar. Meanwhile, the OECD forecasts that Australia’s economic growth will rise toward three per cent in 2018, while it concludes that there is still scope for the Federal Government to increase spending on infrastructure projects.

CORPORATES
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT, RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY

Iron, coal rebound to lift rates

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Original article by David Rogers, Barry FitzGerald
The Australian – Page: 19 & 22 : 29-Nov-16

Coal and iron ore are currently trading at prices that are significantly above the forecasts made in the Australian Government’s May 2016 Budget. Based on current prices, the nation’s export earnings in 2016 will be about $A80bn higher than in 2015. Tim Toohey of Goldman Sachs says this should be sufficient to avert the risk of Australia’s credit rating being downgraded. Financial markets believe that there is also now a better-than-even chance of an increase in the cash rate by the end of 2017.

CORPORATES
GOLDMAN SACHS AND PARTNERS AUSTRALIA PTY LTD, RESERVE BANK OF AUSTRALIA, AUSTRALIAN NATIONAL UNIVERSITY, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, BLOOMBERG LP