Latest news with #LukeYeaman
ABC News
2 days ago
- Business
- ABC News
Australia doesn't have to rush into a US trade deal, says CBA chief economist
Ahead of a possible meeting between Anthony Albanese and Donald Trump on the sidelines of the G7, Commonwealth Bank chief economist Luke Yeaman explains why Australia doesn't need to rush into a trade deal with the United States.
News.com.au
25-05-2025
- Business
- News.com.au
CBA predicts two more rate cuts in 2025 following RBA's ‘noticeable shift in tone'
CBA chief economist Luke Yeaman believes there was a 'noticeable shift in tone' from the Reserve Bank of Australia following their meeting last week, which resulted in interest rates being cut. 'The shift in tone was clear, and they've decided that they're much more concerned about the downside risks to inflation now than they were previously, and they've become more confident that some of the upside risks to inflation has faded,' he told Sky News Business Editor Ross Greenwood. Mr Yeaman claimed Australia now has inflation back within the RBA's target band, but they 'haven't quite declared victory. 'I think Michele Bullock was quite close to that at her press conference this week, and she's said they've now moved into a new phase where their job is to keep inflation in the target band,' he said. Mr Yeaman predicted that Australians may see two more interest rate cuts over the course of this year. In partnership with Commonwealth Bank.
Sky News AU
25-05-2025
- Business
- Sky News AU
CBA predicts two more rate cuts in 2025 following RBA's ‘noticeable shift in tone'
CBA chief economist Luke Yeaman believes there was a 'noticeable shift in tone' from the Reserve Bank of Australia following their meeting last week, which resulted in interest rates being cut. 'The shift in tone was clear, and they've decided that they're much more concerned about the downside risks to inflation now than they were previously, and they've become more confident that some of the upside risks to inflation has faded,' he told Sky News Business Editor Ross Greenwood. Mr Yeaman claimed Australia now has inflation back within the RBA's target band, but they 'haven't quite declared victory. 'I think Michele Bullock was quite close to that at her press conference this week, and she's said they've now moved into a new phase where their job is to keep inflation in the target band,' he said. Mr Yeaman predicted that Australians may see two more interest rate cuts over the course of this year. In partnership with Commonwealth Bank.
The Guardian
06-05-2025
- Business
- The Guardian
Freed from inflation shackles, Jim Chalmers' second term could pursue a greener match-fit economy
Labor's thumping electoral victory has cleared the way for Jim Chalmers to pursue his grand vision: a greener and more dynamic economy, match-fit for a transformed world over the coming decade. Freed from the biggest inflationary shock in a generation, the national mood has shifted to the future, and the shackles binding the treasurer's hands through the first term have been broken. Inflation, which was such a binding constraint in Labor's first three budgets, is back within the Reserve Bank of Australia's 2-3% target range and a world away from the peak of nearly 8% peak at the end of 2022. Cost-of-living pressures remain, but are easing as real wages rise and interest rates fall, while the jobs market has stayed strong. Annual inflation rates Turning the corner The CBA's chief economist, Luke Yeaman, says the much-improved economic circumstances have created 'a very strong foundation for the government to build on leading into this term'. 'No doubt that one of the reasons inflation is so challenging for governments is that when you try to invest, you risk stoking inflation. There's not anything like the concern there was previously, and that does give the government a little more freedom to invest,' he says. Yeaman, who served as Treasury deputy secretary between May 2020 and March of this year, says: 'If you don't look at the international factors, the economy is actually faring very well after a very tough few years. 'But managing the trade war and the more contested global economy will be a very significant challenge. Australia is fairly well placed to weather that storm, but the government and Reserve Bank will want to wait and see how it plays out over the next few months.' Sign up for Guardian Australia's breaking news email Pradeep Philip, a lead partner at Deloitte Access Economics, agrees the economy has 'turned the corner'. Growth may be 'still stuck in second gear', Philip says, but it's a good outcome and not one that was guaranteed when the RBA first began hiking rates three years ago. 'This tells us they [the RBA] have managed to bring inflation down while keeping unemployment from going up, as it has done in the past,' he says. Productivity roadmap Philip says the priority for a second Labor term 'is moving from managing the economic cycle to driving structural reform, because productivity requires that structural reform'. 'The building blocks of this medium-term strategy have already been laid out,' he says, 'industrial resilience, the energy transition, and having important conversations about security and defence.' Labor's heavily interventionist strategy to seize on these opportunities and confront long-term challenges including lowering emissions is part of a global trend, but it comes with big risks. Plans such as the Future Made in Australia program may be justified, but the potential for waste and inefficiency is significant, the Productivity Commission (PC) has warned, especially if decisions are captive to politics or lobby groups. Economists cheered when Chalmers at the weekend declared the Albanese government's 'first term was primarily inflation without forgetting productivity [while] the second term will be primarily productivity without forgetting inflation'. Productivity growth is the key driver of higher living standards over time, and productivity is no higher today than five years ago. Australia is barely more productive than we were a decade earlier, which means all income gains have come via perspiration rather than inspiration. Or, as the PC economist Jeremy Kamil has put it: 'Working harder just to make ends meet is not anyone's idea of prosperity.' One of Australia's leading labour market economists, the University of Melbourne's Prof Jeff Borland, says Australia's future depends on capitalising on 'two big comparative advantages': natural resources and a highly educated workforce. skip past newsletter promotion Sign up to Breaking News Australia Get the most important news as it breaks Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion 'We need to make the most of that highly skilled workforce by doing everything we can to diffuse these new technologies such as AI,' Borland says. Chalmers has commissioned the PC to deliver a series of practical reform measures aimed at creating a more skilled workforce, harnessing data and digital technology, delivering care more efficiently, the net zero transformation and creating a more dynamic and resilient economy. The so-called 'five pillars' inquiries will deliver a practical roadmap for reform for Labor's second term, with the interim reports due out in July and August. 'I'm looking forward to receiving that because we've got an agenda on productivity, but we can do more, and we will do more,' Chalmers said at the weekend. Budget a sea of red Some experts have criticised Chalmers' unwillingness to pursue big bang reforms, most notably in the tax system, where he famously described the approach to reform as taking 'bite-sized chunks'. Anthony Albanese this week played down suggestions his government would surprise the country with major new policies, even as he pushed back against any suggestion Labor lacked ambition. 'We're not getting carried away,' he said. Still, the chief economist at Challenger, Jonathan Kearns, is hopeful Labor's public mandate and bolstered numbers in the Senate 'gives them the confidence and ability to take a stronger economic agenda' to the nation. Saturday's convincing win makes a third term 'very likely', Kearns, a former top economist at the RBA, suggests. 'In that way they should have a greater confidence to implement real reform that is perhaps less popular in the short term.' 'The big priorities are the budget and productivity,' he adds. Indeed, even as easing inflationary pressures widen the scope for policymakers, budgetary pressures are pushing the other way. The March budget showed a sea of red over the coming decade, accompanied with rising debt levels. And S&P Global Ratings recently warned that the country's treasured AAA debt rating is at risk if federal and state governments don't take action to improve their fiscal positions, a warning Albanese mockingly dismissed. Yeaman predicts the structural budget deficit 'will remain a big focus and challenge' through Labor's next term. 'The government should not anticipate in this term the same large upgrades to revenue they saw over the last term. And they continue to face substantial spending pressures in the NDIS, aged care and health, and those budget pressures remain,' he says. Patrick Commins is Guardian Australia's economics editor
The Guardian
09-04-2025
- Business
- The Guardian
ASX 200: Mining companies hit hard as Australian shares plunge on US-China trade war fears
Australian shares swung wildly early on Wednesday, wiping tens of billions of dollars of value from the market over concerns the world's two largest economies are headed for a full-blown trade war. The S&P/ASX 200 opened slightly lower, before plunging more than 2% a few minutes into the session, erasing the rebound of the previous day. By midday, the benchmark had recovered to the 7,435 point mark, representing a 1% fall for the session. Mining companies were early casualties of the drop, with BHP shares falling more than 4% in early trading. Australia's largest biotech company, CSL, was also down more than 4% after Donald Trump announced that a 'major' pharmaceutical tariff was coming soon. Sign up for the Afternoon Update: Election 2025 email newsletter Resources companies, especially those involved in iron ore extraction, are particularly sensitive to any slowdown in global economic growth and a trade war between the US and China. The price movements, which followed a volatile session on Wall Street, came shortly before the US was scheduled to hit China with additional tariffs, due to be implemented just after 2pm (AEST) on Wednesday. Analysts at IG warned that the Australian economy would be hit by the trade barrier. 'If China does dig in, tariffs on its imports to the US will rise to a staggering 104%, a dire outcome for Australia's trade-dependent economy and a potential catalyst for another round of broader risk aversion,' IG analysts said. The Commonwealth Bank chief economist, Luke Yeaman, said that while Australia was 'relatively well-placed to weather the storm', it would be subject to flow-on effects from a protracted trade war. Over the past week, share markets have tended to fall when trade relations deteriorated and rebound when there were signs Trump would strike agreements with key economic partners. Australia recorded its worst trading day in almost five years on Monday. Sign up to Afternoon Update: Election 2025 Our Australian afternoon update breaks down the key election campaign stories of the day, telling you what's happening and why it matters after newsletter promotion Resources and energy stocks have been hit particularly hard this week given demand for iron ore as well as oil and gas would be expected to drop if the global economy falls into a recession. The early share price drops on Wednesday erased just over $50bn in value from the ASX, but those losses were cut in half by midday. The Australian dollar headed towards the US59c mark overnight, before retracing some of the falls. The weakness in the currency, which is heavily influenced by the Chinese economy given Australia's resources ties, has made it more expensive for most travellers heading overseas and consumers buying international goods.
