MONETARY POLICY – AUSTRALIA

Rates cut on cards as economy loses gloss

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Original article by David Uren
The Australian – Page: 2 : 2-Aug-16

The Reserve Bank of Australia is widely tipped to reduce official interest rates to a new low of 1.5 per cent on 2 August 2016. The central bank’s monetary policy easing cycle began in November 2011, and it has since reduced the cash rate 11 times. Factors such as Australia’s low inflation rate and the uncertain outlook for the US and Chinese economies may prompt another cut. However, Tim Lawless of CoreLogic says the RBA will be mindful that a rate cut could put more upward pressure on house prices.

CORPORATES
RESERVE BANK OF AUSTRALIA, CORELOGIC AUSTRALIA PTY LTD, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, REUTERS HOLDINGS PLC

Inflation no cause for ‘market hysteria’

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 8 : 28-Jul-16

Australia’s latest inflation data shows that consumer prices rose by just 0.4 per cent in the June 2016 quarter, while the annual inflation rate of one per cent is the lowest since 1999. The annual core inflation rate was 1.5 per cent, which is well below the Reserve Bank’s target range of 2-3 per cent. Financial markets now estimate that there is a 52 per cent chance that the central bank will reduce official interest rates in August. However, former board member Warwick McKibbin has cautioned against a hasty response to the inflation data.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIAN BUREAU OF STATISTICS, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, JAPAN. OFFICE OF THE PRIME MINISTER, UNITED STATES. FEDERAL RESERVE BOARD

Investors focus on inflation, central banks

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Original article by Jessica Sier
The Australian Financial Review – Page: 20 : 25-Jul-16

Futures traders expect the Australian sharemarket to gain about four points when trading resumes on 25 July 2016. The local bourse is likely to benefit from a positive lead from Wall Street, having lost ground in the previous trading session. Investors will be awaiting the upcoming release of inflation data for the June quarter, which could provide guidance on the Reserve Bank’s next move on the interest rate front. The US Federal Open Market Committee’s monetary policy statement will also be closely scrutinised by investors.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL OPEN MARKET COMMITTEE, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, CAPITAL ECONOMICS LIMITED, BANK OF JAPAN

RBA keeps open door for August interest rate cut

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Original article by Jacob Greber
The Australian Financial Review – Page: 3 : 20-Jul-16

The minutes of the Reserve Bank of Australia’s monthly board meeting show that inflation data for the June 2016 quarter will be a key factor in its monetary policy decision in August. The central bank’s board expects the inflation rate to remain below its target range of 2-3 per cent in the near-term. Meanwhile, board members anticipate that the UK’s exit from the European Union will have a "modest adverse effect" on global economic growth, but they noted that it is too soon to assess the extent of the impact.

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

Only extreme event will trigger RBA QE

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Original article by Mark Mulligan
The Australian Financial Review – Page: 3 : 18-Jul-16

Perpetual Investment’s Matt Sherwood says geopolitical tensions would not be a sufficient reason for the Reserve Bank of Australia to implement quantitative easing. He argues that such measures would only be necessary if there were a major crisis such as the collapse of the Chinese economy. The RBA has developed a strategy for implementing quantitative easing, and Sherwood says this demonstrates that the central bank wants to be more prepared than it was at the onset of the global financial crisis in 2008.

CORPORATES
RESERVE BANK OF AUSTRALIA, PERPETUAL INVESTMENTS, UNITED STATES-CHINA JOINT COMMISSION ON COMMERCE AND TRADE, BT INVESTMENT MANAGEMENT LIMITED – ASX BTT

Jobless rate edges up and fewer hours worked

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Original article by Jacob Greber
The Australian Financial Review – Page: 6 : 15-Jul-16

Data from the Australian Bureau of Statistics shows that the nation’s unemployment rate rose from 5.7 per cent to 5.8 per cent in June 2016. Some 38,400 full-time jobs were created during the month, although this was offset by the loss of part-time positions, resulting in a net gain of almost 8,000 jobs. ANZ Bank economist Felicity Emmett says the low jobs growth and low inflation will most likely prompt the Reserve Bank to reduce the cash rate in August.

CORPORATES
AUSTRALIAN BUREAU OF STATISTICS, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, RESERVE BANK OF AUSTRALIA, HSBC AUSTRALIA HOLDINGS PTY LTD, JP MORGAN AUSTRALIA LIMITED, WESTPAC BANKING CORPORATION – ASX WBC

Election logjam won’t force RBA rate cut

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Original article by Mark Mulligan
The Australian Financial Review – Page: 27 : 5-Jul-16

Paul Dales of Capital Economics expects the Reserve Bank of Australia to leave the cash rate unchanged on 5 July 2016. The general consensus of economists, including Dales, is that the central bank will reduce official interest rates to 1.5 per cent in August, due to weak underlying inflation. The inflation data for the June 2016 quarter is likely to be a bigger influence on monetary policy than the political uncertainty in the wake of the federal election.

CORPORATES
CAPITAL ECONOMICS LIMITED, RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, FITCH RATINGS LIMITED, MOODY’S INVESTORS SERVICE INCORPORATED

Election shock means tougher job for RBA

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Original article by Vesna Poljak
The Australian Financial Review – Page: 28 : 4-Jul-16

The Australian sharemarket is expected to lose ground when trading resumes on 4 July 2016. Uncertainly regarding the outcome of the federal election is likely to weigh on investor sentiment, while the Australian dollar is tipped to fall after peaking at $US0.7503 in local trading on 1 July. Stephen Walters of the Australian Institute of Company Directors says Australia’s "AAA" credit rating may be reviewed as a result of the election. Meanwhile, economists say the Reserve Bank is now unlikely to reduce the cash rate in July.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, AUSTRALIAN INSTITUTE OF COMPANY DIRECTORS, AUSTRALIAN INSTITUTE OF COMPANY DIRECTORS, RESERVE BANK OF AUSTRALIA, FIIG SECURITIES LIMITED, DOW JONES INDUSTRIAL AVERAGE INDEX, STANDARD AND POOR’S 500 INDEX, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET

Brexit may prompt RBA to lean towards cash-rate cut

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Original article by Jacob Greber
The Australian Financial Review – Page: 1 & 6 : 29-Jun-16

Financial markets have priced in a 24 per cent chance that the Reserve Bank of Australia will reduce the cash rate in July 2016, compared with just 12 per cent prior to the "Brexit" referendum. However, the odds of a rate cut in August have increased from 44 per cent to 76 per cent since the UK voted to leave the European Union. Some economists expect the RBA to leave rates on hold in July but adopt an easing bias in its monetary policy statement. The central bank has not had an easing bias since the last rate cut in May.

CORPORATES
RESERVE BANK OF AUSTRALIA, MORGAN STANLEY AUSTRALIA LIMITED, ROYAL BANK OF CANADA, BLOOMBERG LP, UNITED STATES. FEDERAL RESERVE BOARD, BANK OF ENGLAND, DEUTSCHE BANK AG, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, ROY MORGAN RESEARCH LIMITED, AUSTRALIAN BUREAU OF STATISTICS, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, LEHMAN BROTHERS INCORPORATED

Europe aftershocks set to rattle the globe

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Original article by Mark Mulligan
The Australian Financial Review – Page: 22 : 24-Jun-16

Futures traders expect Australia’s benchmark S&P/ASX 200 to be flat or rise slightly when trading resumes on 27 June 2016. However, European sharemarkets and the British pound could be further sold down in the next week, in the wake of the UK’s vote to leave the European Union. Meanwhile, Paul Bloxham of HSBC expects the Reserve Bank of Australia to leave the cash rate on hold in July, noting that low inflation remains the central bank’s focus.

CORPORATES
STANDARD AND POOR’S ASX 200 INDEX, RESERVE BANK OF AUSTRALIA, HSBC AUSTRALIA HOLDINGS PTY LTD, BANK OF ENGLAND, EUROPEAN CENTRAL BANK, JP MORGAN AND COMPANY INCORPORATED, LOMBARD STREET RESEARCH LIMITED, UNITED STATES. FEDERAL RESERVE BOARD, CHICAGO BOARD OPTIONS EXCHANGE VOLATILITY INDEX, BANK OF AMERICA CORPORATION, MERRILL LYNCH AND COMPANY INCORPORATED, GREAT BRITAIN. OFFICE OF THE PRIME MINISTER