MONETARY POLICY – AUSTRALIA

Don’t expect rate cut soon: Bullock

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 8 : 25-Sep-24

Reserve Bank of Australia governor Michele Bullock has ruled out an official interest rate cut in the near-term, following the central bank’s decision to leave the cash rate unchanged at 4.35 per cent on Tuesday. Bullock says the RBA remains focused on the underlying inflation rate, rather than the headline rate. Monthly data to be released on Wednesday is expected to show that headline inflation was within the RBA’s target range of 2-3 per cent in August, compared with 3.5 per cent in July. However, Bullock has emphasised that electricity rebates from the federal and state governments contributed to this fall, and headline inflation is likely to rise above the target when the rebates expire next year. Lower petrol prices also put downward pressure on headline inflation in August.

CORPORATES
RESERVE BANK OF AUSTRALIA

Inflation is smashing incomes more than interest rates are

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Original article by John Kehoe, Michael Read
The Australian Financial Review – Page: 3 : 10-Sep-24

Challenger’s chief economist Jonathan Kearns refutes claims by Treasurer Jim Chalmers that the Reserve Bank’s interest rate rises are "smashing the economy". The latest national accounts data shows that total household incomes rose by 6.2 per cent in 2023-24. Kearns contends that interest rates eroded just 1.3 percentage points of the income gains, compared with the 4.4 percentage point impact of inflation. He notes that unlike interest rates, inflation affects all households. Kearns is a former economist at the Reserve Bank.

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY, CHALLENGER LIMITED – ASX CGF

Treasurer’s panic and disloyalty

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Original article by Dennis Shanahan, Jack Quail
The Australian – Page: 1 & 4 : 4-Sep-24

Former prime minister John Howard has criticised Treasurer Jim Chalmers for attempting to blame the Reserve Bank of Australia for the nation’s high interest rates. He contends that this has badly backfired, and RBA governor Michele Bullock does not deserve to be attacked in this way. Howard has also defended the performance of Bullock and the RBA’s board, arguing that they have had no alternative to raising the cash rate, due to factors such as the level of inflation and government spending. However, former RBA governor Bernie Fraser says the central bank has lost credibility and needs to reduce the cash rate sooner rather than later.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, RESERVE BANK OF AUSTRALIA

‘Too far’: ALP frontbencher’s warning to Reserve Bank

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Original article by Jack Quail
The Australian – Page: 1 & 4 : 3-Sep-24

Treasurer Jim Chalmers says CPI data to be released on Wednesday will underline the impact of interest rate rises on the economy. Chalmers contends that he is "not taking a shot at anyone", although some observers have suggested that he is seeking to blame the Reserve Bank for the slowdown in the economy. Independent economist Saul Eslake says the fact that there has been only a small uptick in the unemployment rate refutes Chalmers’ claim that the Reserve Bank’s interest rate increases are "smashing the economy". Meanwhile, Assistant Immigration Minister Matt Thistlethwaite says the central bank must not go "too far" in seeking to combat inflation.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, RESERVE BANK OF AUSTRALIA

RBA sticks to its guns: no rate cut before 2025

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Original article by Joe Kelly
The Australian – Page: 4 : 21-Aug-24

The minutes from the Reserve Bank of Australia’s two-day board meeting in eatly August show that it considered increasing the cash rate to 4.6 per cent. The minutes have also reinforced expectations that the central bank will not reduce the cash rate in 2024, with the board concluding that restoring inflation to the mid-point of its 2-3 per cent target range would be delayed until 2027 if official interest rates were cut to 4.1 per cent in the near-term.

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RESERVE BANK OF AUSTRALIA

No rate cuts before Christmas

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Original article by Michael Read
The Australian Financial Review – Page: 1 & 4 : 7-Aug-24

The Reserve Bank of Australia’s governor Michele Bullock says it gave "very serious consideration" to increasing the cash rate on Tuesday. However, the RBA’s board was of the view that the benefits of leaving official interest rates at 4.35 per cent outweighed the risk to the job market of an increase. Bullock emphasised that recent financial market volatility did not influence the monetary policy decision, contending that Monday’s sharemarket rout was an "overreaction" to one poor jobs report in the US. She also indicated that the RBA now expects interest rates to remain on hold until at least the end of 2024. Meanwhile, the RBA has advised that inflation is unlikely to return sustainably to its target range of 2-3 per cent before late 2026.

CORPORATES
RESERVE BANK OF AUSTRALIA

Share rout heat on RBA

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Original article by Sarah Jones, Joanne Tran, Jessica Sier
The Australian Financial Review – Page: 1 & 28 : 6-Aug-24

The global sharemarket downturn has coincided with the Reserve Bank of Australia’s two-day monetary policy meeting. Governor Michele Bullock will be among the first central bankers to publicly comment on the equities slump when she holds a press conference on Tuesday afternoon. Financial market traders now expect the RBA to reduce the cash rate in December, compared with previous expectations of February 2025. Meanwhile, there is speculation that the US Federal Reserve may be forced to intervene and reduce official interest rates before its next scheduled meeting in September.

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RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD

Traders gird for dangerous 48 hours

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Original article by Sarah Jones
The Australian Financial Review – Page: 27 : 31-Jul-24

Bond market pricing suggests that there is about a 20 per cent chance that the Reserve Bank of Australia will increase the cash rate in August. The chances of a rate rise in September are now 31 per cent. Quarterly CPI data to be released on Wednesday is likely to be a key factor in the RBA’s monetary policy decision; the central bank’s preferred measure of trimmed mean inflation is tipped to ease from one per cent to 0.9 per cent. Investors will also be keenly awaiting the outcome of the US Federal Reserve’s two-day policy meeting, and signs that rate cuts are on its agenda in coming months.

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RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD

More RBA rate rises unwarranted as Yarra cuts growth outlook

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Original article by Ronald Mizen
The Australian Financial Review – Page: 4 : 9-Jul-24

Yarra Capital’s chief economist Tim Toohey has downgraded his growth forecast for the Australian economy to just 1.75 per cent in 2024-25, compared with his previous expectations of 2.25 per cent growth. In contrast, the Reserve Bank anticipates growth of 2.1 per cent in the current financial year, while the federal government’s 14 May budget papers show that the Treasury expects the economy to expand by two per cent. Toohey says factors such as a slowdown in employment growth among non-migrant workers and plans to curb the migrant intake could dampen economic growth, and in turn weaken the case for a further tightening of monetary policy.

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YARRA CAPITAL PARTNERS PTY LTD, RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY

Treasurer on the defensive as RBA raises alarm over big-spending budgets

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Original article by Patrick Commins
The Australian – Page: 1 & 4 : 19-Jun-24

Reserve Bank governor Michele Bullock says the central bank’s board is prepared to "do what is necessary" to restore inflation to its target range by mid-2025. The RBA’s decision on Tuesday to leave the cash rate unchanged at 4.35 per cent had been widely expected by economists. Bullock has indicated that the board had considered a rate rise, while a rate cut had not been on the agenda; she notes that the inflation figures for April were "a bit higher than expected". The RBA also expressed concern in its monetary policy statement that cost-of-living relief and other spending measures in federal and state budgets may fuel inflation. However, Treasurer Jim Chalmers says the government’s strategy is "the right one".

CORPORATES
RESERVE BANK OF AUSTRALIA, AUSTRALIA. DEPT OF THE TREASURY