Latest news with #StatementofMonetaryPolicy
AU Financial Review
20-05-2025
- Business
- AU Financial Review
Bullish ASX investors shouldn't ignore RBA warning
The Reserve Bank's Statement of Monetary Policy, released as the RBA cut rates by 0.25 per cent to 3.85 per cent, the lowest level since May 2023, contains the word 'uncertain' 134 times. At her post-decision press conference on Tuesday afternoon, governor Michele Bullock went further, explaining that the environment was not just uncertain but also unpredictable; scenarios released on Tuesday suggest everything from a relatively benign outcome of a modest decline in global growth that puts downward pressure on both GDP growth and inflation (the central bank's base case) to a trade war scenario that smacks growth and causes deflation, to a trade peace scenario which is positive for growth, but also reignites inflation concerns.
West Australian
20-05-2025
- Business
- West Australian
RBA rate cut live updates: Australian homeowners sweat on interest rates decision and pray for relief
Join us as we find out whether the Reserve Bank will gift Aussie homeowners more relief in the form of another interest rate cut. The decision will be handed down at 2.30pm AEST. When the Reserve Bank releases its Statement of Monetary Policy at 2.30pm today, economists will be scrutinising the language to determine what it means for future rate cuts. Currently, most economists are expecting at least two more cuts by the end of the year, bringing the official cash rate down to 3.35 per cent. But with global uncertainty, how the Bank frames its forward outlook will either confirm or confuse those predictions. Brien McDonald, senior economist at National Australia Bank is looking for guidance on what is the 'neutral rate' - an official cash rate that is neither restrictive or stimulatory. After a decade of ultra-low rates following the Global Financial Crisis and COVID, that rate is expected to be significantly higher. Diana Mousina, deputy chief economist is looking for something similar. If the RBA says monetary policy is still restrcitive, that suggests 'the amount of cuts so far is small and more is likely'. By contrast if the Bank says there is too much uncertainty, or 'we have to be careful about the pace of easing', that suggests any future rate changes will be minimal or take place only when the data confirms it is time to move. Mr McDonald is also looking for a steer on how the 'Liberation Day' tariffs have affected the Australian economy, and where pockets of inflation continue to bedevil the economy. Expectations are high that the RBA will cut interest rates today, with a decision due at 2.30pm Sydney time. Markets tip are nearly-certain that the official cash rate will be cut 25 points to 3.85 per cent. But there are a few reasons to be cautious. Analysts warn borrowers should be wary of the risk that inflation bounces back. Read more here from The West Australian. It's been a huge day in news already but let's be honest - the main thing on everyone's mind is interest rates. Will the Reserve Bank cut rates again for the second time in a row, and provide some much needed relief for Aussie homeowners? The answer is probably - but even if they do that doesn't mean it will be good news. The hidden danger behind another rate cut if that housing prices may go up again. Which means that anyone trying to get into the market will find it even harder. Read the full story here.
Courier-Mail
18-05-2025
- Business
- Courier-Mail
Banks quash interest rate frenzy
A shock jump in home loan arrears has failed to stop several banks from quashing expectation of mega rate cuts as frenzy builds ahead of Tuesday's Reserve Bank meeting. The head of the country's biggest bank Commonwealth Bank CEO Matt Comyn is among those moving to temper rate cut expectations, after releasing his third quarter 2025 trading update for the period to March 31 which saw profit of $2.6 billion. RELATED: Big Aus bank slashes rates as RBA decision looms May interest rate decision already made for Reserve Bank MORE: Inside new Liberal leader's property portfolio Sad finding amid wild Aussie bank rate cut call Mr Comyn expects a 25 bps cut to the cash rate target by the Reserve Bank board on Tuesday – a view reinforced by CBA senior economist Belinda Allen who on Thursday stuck with their call due to the unemployment rate and wages growth coming in within RBA expectations. CBA has also flagged two more cuts over the year for a total 75bp ahead to close 2025 at 3.35pc – almost half the projections of rival National Australia Bank which has pegged a 150bp fall by February next year. The market is virtually 50-50 at this stage on whether RBA will go 50bps, with the ASX rate tracker currently at a 51pc expectation (down from 56pc on May 1) of an interest rate decrease to 3.6pc come Tuesday. That would make it a 50bp cut, similar to the NAB view of the equivalent of a double rate cut on Tuesday. This as CBA, the country's biggest bank, on Wednesday highlighted a rise in its problem loans forcing an impairment expense of $223m during the quarter, with Mr Comyn flagging 'increases in consumer arrears and corporate troublesome and non-performing exposures'. Mr Comyn said in a statement to the stock exchange that 'home loan arrears have increased over the quarter to 0.71pc' – up 5 basis points to sit above its historic average (0.65pc). CBA home loan arrears are back up to the level they were at in March 2019, a year before the pandemic hit, and at a time when cash rate had languished at a low 1.5pc for more than three years. 'We know it has been another challenging period for many Australian households and businesses dealing with cost of living pressures,' Mr Comyn said. 'We have remained focused on proactively engaging with our customers on a range of support options to help those who need it most.' MORE: Shock: Brisbane prices to smash Sydney Australia's biggest political property moguls revealed Global investment banker TD Securities has also flagged that the RBA would be 'slow and steady and in no rush' to slash rates this year. An update to clients overnight by Prashant Newnaha, senior Asia-Pacific rates strategist, said 'our current forecast is for the RBA to deliver two further 25 bps cuts, in May and in August'. That would bring the cash rate target down to 3.85pc on May 20 and then 3.6pc in August. 'We continue to believe it's highly unlikely the Bank delivers cuts in between (Statement of Monetary Policy) meetings given the outlook for tariffs is nowhere as dire as it was a few weeks back.' The SoMP is released four times a year alongside the February, May, August and November monetary policy decisions of the RBA's monetary policy board. The only other rate cut that TD Securities flagged was a further 25 bps reduction in November, which would bring the cash rate target down to 3.35pc. 'The risk to our call is for the RBA to deliver another 25 bps cut in Nov, but the market is priced for this outcome.' TD Securities believes 'CPI and labour market outcomes have landed close to the Bank's Feb'25 Statement on Monetary Policy forecasts and should support the Bank easing at next week's meeting'. It said inflation had continued to decline steadily. 'With respect to CPI, the Bank has paid more attention to housing inflation and in that respect the outcomes are moving in the right direction for the RBA. The decline in the cost of building a new dwelling has dropped for three straight months now and the annual series has provided a good lead for where trimmed mean CPI is heading. The trend suggests the Bank is on course to hit its 2.5pc target.' It said actual annual rental growth was also slowing. Analysts were keen to see how the RBA board approached the question of risks around tariffs. 'Of particular focus will be the RBA's assessment of the risks around tariffs. There are downside risks to growth, but we see no compelling case for trimmed mean CPI forecasts to deviate from 2.7pc. They could be lowered a smidge, but unlikely as low as 2.5pc.' MORE REAL ESTATE NEWS
Reuters
19-02-2025
- Business
- Reuters
Australia Q4 wages rise at slowest pace in over 2 years
SYDNEY, Feb 19 (Reuters) - Australian wages rose at the slowest annual pace in more than two years in the fourth quarter even as unemployment stayed near historic lows, suggesting the strong labour market was not a bar to further declines in inflation. The result will likely reassure policymakers that the labour market is not generating much price pressure. The surprisingly strong jobs market is a reason the central bank cautioned against further monetary policy easing, having cut rates for the first time in more than four years on Tuesday. Figures from the Australian Bureau of Statistics (ABS) on Wednesday showed its wage price index rose 0.7% in the December quarter, the lowest increase since the first quarter of 2022. That compared with market forecasts of 0.8%. Annual pay growth slowed to 3.2%, from 3.6%, the lowest reading since the third quarter of 2022. Growth in the private sector ran at 3.3% in the quarter, with public wages growth slowing sharply to only 2.8%. "Wage pressures are easing, which makes for a softer inflation outlook and goes some way toward justifying yesterday's rate cut," said Sean Langcake, head of macroeconomic forecasting for Oxford Economics Australia. "We still expect to see the labour market slacken over 2025, which will take some more heat out of wage growth," he said. ABS noted the drop in contribution from the public sector was driven by the timing of some labour agreements shifting to outside of the December quarter, while others expired or had smaller increases. Australia's jobless rate has hovered near 4.0% for a year, yet inflation has subsided from a peak of 7.8% in late 2022 to 2.4% in the fourth quarter of 2024. Annual wage growth has declined by one full percentage point over the past year. The Reserve Bank of Australia has said it believes the labour market remains tight relative to full employment, but it no longer expects it to loosen much further. That is why underlying inflation is now projected to settle above the mid-point of its target band of 2-3% over the coming years. It expects wage growth to pick up to 3.4% by year-end, driven by the public sector where announced pay rises are likely to contribute a quarter of a percentage point to growth. But the central bank noted the decline in job-switching could result in less upward pressure on wages in its Statement of Monetary Policy on Tuesday. Swaps imply just a 16% probability of a follow-up rate cut in April, with the next rate cut expected in May or July.
