Latest news with #LuciEllis
News.com.au
21-05-2025
- Business
- News.com.au
Westpac chief economist Luci Ellis takes aim at Donald Trump's tariffs
A big four bank chief economist has accused the White House of 'punching its own economy' in a wide-ranging speech on global growth. In a speech at the Morningstar conference, Westpac chief economist Luci Ellis took aim at US President Donald Trump's tariff policy and its impact on the global economy. 'It will be a huge growth hit but not a full-blown recession,' she said. 'And that's working on the assumption that just, you know, Trump can stop punching the economy in the face anytime he likes,' she said. Mr Trump announced on April 2 a global tariff policy on just about every trading partner on the basis on evening up the US trade deficit. At a minimum, every country, including Australia, faced a 10 per cent tariff, while 'cheating' countries faced higher tariffs. Mr Trump eventually paused the tariffs for 90 days due to the damage that was being done to his own economy and money markets. Ms Ellis said the Australian example showed the US tariff policy would not work. 'As we know in Australia, you don't get rich behind a tariff wall,' she said. 'It actually is not the recipe for a competitive, innovative manufacturing sector. It's a recipe for people saying every time I find it hard to compete with imports, I'm going to go to the government and ask for more help.' The economist also forecast that Australia would grow slowly on the back of China hitting its 5 per cent growth target, labelling Australia's economic growth as a 'bit disappointing', which is set to continue even with a rate cut. According to Westpac, consumer growth will remain sluggish at 1.5 per cent, below the revised 1.9 per cent Reserve Bank target. 'Consumers have been really, really grumpy over the last few years because they've really been copping it in the neck,' Ms Ellis said. 'And while they are still gloomy, and they did take a little bit of a tumble in sentiment after liberation day, we can see that in the daily run of data, the survey was in the field that week, things are a little bit better than what they were two years ago.' But in welcome news for households, Ms Ellis predicted there would be at least two more interest rate cuts that could help lift consumer spending. 'Obviously, the big news this week is the RBA doing what it needed to do and cutting rates by 25 basis points yesterday,' she said. 'That was what we predicted. That was what the market had priced in. 'We expect two more cuts this year. This has been our longstanding view, coming down to 3.35 per cent by year end, but there's is a chance they do more.' Ms Ellis said Australia's big four drivers of the economy – iron ore, coal, liquefied natural gas and university education – were tapped out but believed there could be new drivers going forward. 'It may surprise you to know that Australia has a $7.5bn dollar export industry called software licensing,' she said. 'That's more than we export in copper metal, in aluminium, in barley or in rice. 'You probably didn't realise that. 'And then I'll mention Canva, Atlassian and WiseTech. 'And you add the two together, add the three together, and that's pretty much most of that 7½ billion. 'It only takes a few winners to suddenly have a whole new export industry.'
ABC News
19-05-2025
- Business
- ABC News
RBA expected to cut interest rates, says Westpac chief economist
Westpac chief economist Luci Ellis expects a quarter of percentage point to be shaved off the cash rate, and she's also pencilled in two further cuts in August and November.
The Star
30-04-2025
- Business
- The Star
Australian dollar retreats from 2025 highs as focus shifts to CPI
Pedestrians walk past the Reserve Bank of Australia building in central Sydney. — Reuters SYDNEY: The Australian and New Zealand dollars were on the back foot yesterday as investors await clarity in US-China trade talks, while a domestic inflation report and a looming national election may offer some direction for the Aussie this week. Australia will release quarterly inflation data tomorrow that could seal the case for a rate cut in May. Analysts are looking for the consumer price index (CPI) to rise 0.8% in the quarter, nudging the annual pace down to 2.3% from 2.4%. The key trimmed mean measure of core inflation is seen rising 0.7% in the quarter, with annual inflation slowing to 2.9% from 3.2%, back in the Reserve Bank of Australia's 2% to 3% target band for the first time since late 2021. Luci Ellis, chief economist at Westpac, said the turmoil abroad means the central bank will cut rates in May even though the inflation data could be a little disappointing. 'Now, uncertainty has escalated to a whole new level and the risks have completely flipped. 'Even though we do not expect the US administration to implement tariffs at the rates originally announced, some damage has already been done,' said Ellis. Indeed, swaps suggest a quarter-point move has been fully priced in, with a total of five rate cuts expected this year. That's partly why the Aussie dollar is struggling to extend its rally and was last down 0.2% to US$0.6382. It has climbed for three straight weeks to US$0.6439, the highest since early December, but resistance now sits at 64 US cents. The kiwi dollar also eased 0.2% to US$0.5950, having gained 0.4% last week to a five-month peak of US$0.6029. Resistance is around 60 US cents. While US President Donald Trump has claimed progress is being made on trade with China, Beijing denied any talks were taking place. However, the Trump administration signalled openness to reducing tariffs and China exempted some imports from its 125% levies. The campaign for the national election in Australia is entering its final leg before the polling day on May 3, with Prime Minister Anthony Albanese ahead in the recent polls as the government doles out more cost of living relief to struggling households. The generous election promises prompted analysts at S&P Global Ratings to warn that Australia's AAA sovereign credit rating may be at risk, although the country's debt issuance is still low compared with international peers. 'The budget is already regressing to moderate deficits as public spending hits post-war highs, global trade tensions intensify and growth slows,' they said in a note yesterday. 'How the elected government funds its campaign pledges and rising spending will be crucial for maintaining the rating.' — Reuters
West Australian
30-04-2025
- Business
- West Australian
RBA interest rates: Core inflation back into target band for first time since 2021
New consumer price data will give the Reserve Bank room to move on interest rates, with core inflation returning to the target range for the first time since 2021. Core inflation — also known as trimmed mean as it removes volatile items — was 2.9 per cent for the 12 months to March, according to Australian Bureau of Statistics data released on Wednesday. 'Trimmed mean annual inflation was 2.9 per cent in the March quarter, down from 3.3 per cent in the December quarter. This is the lowest annual trimmed mean inflation rate since the December 2021 quarter,' the ABS said. The central bank wants to be confident prices are coming under control so it can turn focus to US President Donald Trump's trade chaos if necessary. Headline inflation — which gives the full picture of the impact on Aussie wallets — was 2.4 per cent. But there was a clear rebound in pressure. For the March quarter, prices rose 0.9 per cent. The numbers don't yet show the impact of the trade war but are the fullest measurement of inflation so far this year as the data includes all items tracked by the bureau. Big banks Westpac and Commonwealth had tipped core inflation would return to target and backed an interest rate cut when the Reserve Bank meets in mid-May. Westpac's Luci Ellis reckoned borrowers could 'lock in' a rate reduction. 'Even though we do not expect the US administration to implement tariffs at the rates originally announced, some damage has already been done,' she said in a recent note. 'Global growth — and especially US growth — will be slower; the response of China will be disinflationary for the world outside the US; and uncertainty is likely to delay decisions on some investment projects. 'For this reason, we lock in our view that the (RBA) board will cut the cash rate by 25 points to 3.85 per cent on 20 May. 'Holding rates steady in the face of the global turmoil and softer momentum in the labour market — for the sake of (a slight fall of) inflation – would be very hard to explain.' Financial markets overnight also considered a rate cut likely. The inflation news comes after analysts from S&P Global said Australia's AAA credit rating would be at risk from the bipartisan post-pandemic spending spree and Federal election cash splash. That would drive up interest rates on government debt and for bank lending, including mortgages. Government spending spiked during COVID-19 and a range of big long-term commitments meant it never returned back to the levels seen before the pandemic. That trend — and emergency low interest rates — drove inflation to the highest level in decades, peaking through 2022.
Business Recorder
28-04-2025
- Business
- Business Recorder
Australian dollars retreats from 2025 highs, focus turns to CPI data, election outcome
SYDNEY: The Australian and New Zealand dollars were on the back foot on Monday as investors await clarity in US-China trade talks, while a domestic inflation report and a looming national election may offer some direction for the Aussie this week. Australia will release quarterly inflation data on Wednesday which could seal the case for a rate cut in May. Analysts are looking for the CPI to rise 0.8% in the quarter, nudging the annual pace down to 2.3% from 2.4%. The key trimmed mean measure of core inflation is seen rising 0.7% in the quarter, with annual inflation slowing to 2.9% from 3.2%, back in the RBA's 2-3% target band for the first time since late 2021. Luci Ellis, chief economist at Westpac, said the turmoil abroad means the RBA will cut rates in May even though the inflation data could be a little disappointing. 'Now, uncertainty has escalated to a whole new level and the risks have completely flipped. Even though we do not expect the US administration to implement tariffs at the rates originally announced, some damage has already been done,' said Ellis. Indeed, swaps suggest a quarter-point move has been fully priced in, with a total of five rate cuts expected this year. That's partly why the Aussie is struggling to extend its rally and was last down 0.2% to $0.6382. It has climbed for three straight weeks to $0.6439, the highest since early December, but resistance now sits at 64 cents. Australia, NZ dollars manage to steady amid US policy turbulence The kiwi dollar also eased 0.2% to $0.5950, having gained 0.4% last week to a five-month peak of $0.6029. Resistance is around 60 cents. While US President Donald Trump has claimed progress is being made on trade with China, Beijing denied any talks were taking place. However, the Trump administration signalled openness to reducing tariffs and China exempted some imports from its 125% levies. The campaign for the national election in Australia is entering its final leg before the polling day on May 3, with Prime Minister Anthony Albanese ahead in the recent polls as the government doles out more cost of living relief to struggling households. The generous election promises prompted analysts at S&P Global Ratings to warn that Australia's AAA sovereign credit rating may be at risk, although the country's debt issuance is still low compared with international peers. 'The budget is already regressing to moderate deficits as public spending hits post-war highs, global trade tensions intensify, and growth slows,' they said in a note on Monday. 'How the elected government funds its campaign pledges and rising spending will be crucial for maintaining the rating.'
