Friday, May 10, 2019

Reserve Bank slashes growth forecasts, frets about housing fallout, June rate cut bets back on

The Reserve Bank has slashed its forecasts for economic growth as subdued household income and the real estate correction continue to bite. 

In its quarterly statement on monetary policy released this morning, the RBA says weakening household consumption is a "key risk" to the economy especially in the context of falling real estate prices. 

ABC's Peter Ryan says the RBA now has case to cut the cash rate as early as June.

Source: Reserve Bank of Australia

Thursday, May 9, 2019

Climate change to wipe $571 billion off real estate by 2030, report warns



The Climate Council is warning that $571 billion could be wiped off Australian real estate values by 2030 unless future governments take action to tackle climate change. 

Research released today says climate change could see economic growth reduced by $4 trillion over the next 80 years and that insurance premiums could become unaffordable for one in 19 households. 

Climate Council chief executive Amanda McKenzie speaks with ABC's Peter Ryan

Wednesday, May 8, 2019

Economist Warren Hogan says RBA keeping powder dry for shocks for China, housing correction escalation

Economist Warren Hogan says the Reserve Bank board will be careful to hold back future interest rate cuts to deal with potential shocks from China or an escalation in the housing correction. 

Professor Hogan - now at the UTS Business School in Sydney - told ABC's Peter Ryan it is significant that the RBA has sidelined its traditional focus on inflation to keeping the jobless rate below the current five percent.  

Warren Hogan spoke with Peter Ryan on The World Today

Tuesday, May 7, 2019

Reserve Bank defies pundits and leaves cash rate unchanged - but makes it clear the focus is on jobs

The Reserve Bank kept its powder dry and left the cash rate on hold this afternoon at 1.5 percent - where it’s been since August 2016.

However, the statement makes it very clear the Board is keeping an eagle eye on the labour force remaining cautiously positive about the low with jobless rate low of 5 percent.

Saxo Capital Markets strategist Eleanor Creagh got it right on AM this morning when she bet the RBA would hold back because of the jobs factor

The message is clear - inflation is one factor but for now the game is all about jobs, meaning every meeting from now on is “live” with a growing likelihood that rates will be cut in July with a followup in August.





Economists divided on Reserve Bank rate cut in midst of election. I speak with Saxo strategist Eleanor Creagh and Ian Henschke from National Seniors Australia

Futures markets are factoring in a 44 percent chance that the Reserve Bank will cut interest rates at today's board meeting in the midst of an election. 

While borrowers are set to get cheaper money, Nationals Seniors Australia warns low deposit rates is making life harder for retirees who might be tempted to take on riskier investment in search of better returns.

Here's my preview from this morning's AM

Monday, May 6, 2019

Westpac profit tumbles as Royal Commission compensation bites

Westpac's half-year profit has fallen by almost a quarter as the cost of customer compensation mounts and home-lending growth stagnates. 

The bank's net profit fell 24 per cent to $3.2 billion for the half-year to March 31. 

Chief executive Brian Hartzer told an investor briefing that customer remediation was a priority with $1.4 billion put aside for refunds over the next three years after revelations of misconduct emerged at last year's Royal Commission.

Here's my report from The World Today