Friday, March 20, 2020

Banks to defer loan repayments to small business, NAB extends six month offer to residential borrowers. I speak with NAB boss Ross McEwan

Australia's major banks have announced action to protect households and consumers from the economic fallout from the coronavirus. 

Small businesses will be given a six month deferral on their loan repayments to help get them through the tough months ahead.

The National Australia Bank is going a step further, offering the same relief to residential mortgage customers. 

Chief executive Ross McEwan tells ABC's Peter Ryan Australia is facing a risk that eclipses the global financial crisis a decade ago.

Coronavirus shaping as bigger threat than GFC, warns CBA boss Matt Comyn


Commonwealth Bank chief executive Matt Comyn warns the coronavirus pandemic is shaping up as a much bigger threat than the global financial crisis.

In an interview with ABC colleague Elysse Morgan, Mr Comyn says not all businesses will be saved and direct government payments might be needed.

Thursday, March 19, 2020

Reserve Bank to cut cash rate, embark on money printing program to confront cororavirus crisis

The Reserve Bank is tipped to make an emergency interest rate cut to a new low of 0.25 percent today as it unleashes a quantitative easing program to cushion the economy from the coronavirus crisis. 

Also, banks are coming under pressure to offer deferred loan repayments to small and medium businesses as ANZ economists predict a recession and a jobless rate of 7.8 percent. 

ABC's Peter Ryan analyses the latest move by the Reserve Bank.

Wednesday, March 18, 2020

Coronavirus - coming to you from the ABC's newest home bureau


Virgin Australia grounds all international flights as coronavirus takes airlines to brink

With global travel in lockdown, the airline Virgin Australia will suspend all international flights and halve its domestic services. 

The drastic action comes as Virgin joins others in the aviation industry struggling to survive as the coronavirus pandemic begins to freeze the global economy. 

S&P Global Ratings predicts that world will be unable to avoid a recession with the US and Europe facing a deep downturn. 

ABC's Peter Ryan analyses the developments for The World Today.

Tuesday, March 17, 2020

Reserve Bank sees rapid coronavirus recovery as “very unlikely” and braces for “significant effect” on economy

The Reserve Bank believes the scenario of a rapid recovery from the coronavirus outbreak is “very unlikely” and that it’s realistic to consider the fallout will have a “significant effect” on Australia’s economy.

The prediction in the minutes from the RBA board’s meeting a fortnight ago comes as panic selling on global markets fuels fears that the world is heading into a deep recession even with emergency rate cuts by central banks.

Board members noted that since it’s previous meeting in February that “it had become increasingly clear that the spread of the novel coronavirus would cause major economic disruption around the world.”

“There was an increasing probability that people would seek to avoid gatherings, including public transport and perhaps workplaces.

“It was too early to predict how persistent these effects would be and at what point economic activity would rebound.”

Effectively looking into a crystal ball, the board acknowledged that COVID-19 had forced some central banks to consider interest rate cuts, accelerating the RBA’s decision to cut rates on March 3 to a new record low of 0.5 percent.

The Reserve Bank is likely to cut the cash rate again to 0.25 percent later this week when RBA governor Dr Philip Lowe issues an unscheduled policy statement that could include the move to buy bonds and assets through quantitative easing.

Since the March meeting, the US Federal Reserve has made two emergency interest rate cuts of 1.5 percentage points after heaving selling on Wall Street saw US shares tumble in volumes not seen since the 1987 sharemarket crash.

At the time of the March meeting, the Board believed international financial markets were “functioning effectively despite the sharp rise in volatility”.

The minutes note that despite a freeze in supply chains from China, its demand for coal had not reduced and iron ore imports had not been significantly affected.

The board believes Australian will benefit in late 2020 when Chinese growth rebounds in a race to make up for lost production.

But reflecting previous public statements, the Board acknowledged that COVD-19 was hurting Australia’s economy particularly in education, transport and tourism.

In addition to the coronavirus impact, the minutes note that bushfires over summer will have damaged growth in both the December and March quarters.

The board said that an extended period of low interest rates would be required and that it was prepared to cut the cash rate again to support Australia’s economy.

The RBA board’s next scheduled meeting is on April 7, but it is becoming likely that the monthly gathering will be pre-empted by an emergency rate cut this week.


Follow Peter Ryan on Twitter @peter_f_ryan