Australian interest rates

Westpac are out with a note on their “more sanguine” concerns about inflation, with a much faster drop to inflation in 2023.

By Gareth Aird, head of Australian economics at CBA: Key Points RBA Governor Lowe yesterday provided a clear hint that the pace of rate hikes could be about to slow.

Reserve Bank of Australia (RBA) governor, Phil Lowe, gave a speech on Thursday in which he confirmed that further rate hikes are coming, which will be guided by backward looking data [my emphasis]: The Board expects that further increases in interest rates will be required over the months ahead.

Data released last week by the Australian Bureau of Statistics (ABS) showed that the value of mortgage commitments tanked by 8.5% July, to be down 11.3% year-on-year. This decline in mortgage commitments captured the first three Reserve Bank of Australia (RBA) rate hikes – i.e.

As expected, the Reserve Bank of Australia (RBA) has lifted the official cash rate (OCR) another 0.5% – the fifth consecutive rate increase – taking the OCR to 2.35%.

Sydney’s nascent house price crash has hit a new milestone, according to the CoreLogic daily dwelling values index.

By Gareth Aird, head of Australian economics at CBA: Key Points: Home borrowers have barely felt the impact of the RBA’s rapid 175bp of tightening since 4 May from a cash flow perspective.

Friday night’s US unemployment print saw an unexpected rise as previous results were revised down with average hourly earnings also not exactly setting the inflation fires raging, at just over 5% annually.

Australia’s auction clearance rates rebounded over the weekend, with the national preliminary clearance rate lifting to 62.3%, up from 59.1% last week (revised down to 55.8% on final figures). Sydney’s preliminary auction clearance rate rose to 60.0%, up from 56.9% last week (later revised down to 51.7%).

By Gareth Aird, head of Australian economics at CBA: Key Points: The RBA will raise the cash rate at the September Board meeting. We expect another 50bp hike to 2.35%. The risks sits with a smaller increase (either 40bp or 25bp), but we consider that risk to be quite low.

The Reserve Bank of Australia (RBA) is expected to increase the cash rate for a fifth consecutive month next Tuesday, with most tipping a 0.5% rise.

The Australian Bureau of Statistics (ABS) has released retail sales data for July, which posted strong 1.3% growth in July with sales up 16.5% year-on-year.

Ross Gittins penned an interesting article blaming housing policy failures over the pandemic – namely the HomeBuilder Stimulus and state stimulus programs – for worsening Australia’s inflation problem: The federal government offered HomeBuilder grants to people ordering new homes or major alterations.

I can’t see how he can be anything other than hawkish given the equity market mania driving premature reflation.

Societe General with a glance at the progress of QT and where it will end.  Shrinking the SOMA The Fed began shrinking its portfolio, i.e. quantitative tightening (QT), in June 2022.

Morgan Stanley on the salience of Jackson Hole this week.

Goldman with an interesting note on the global trends in inflation. GS trimmed core inflation: Our July sequential trimmed core inflation measures were very strong in the UK (+6.5% month-over-month annualized), the Euro area(+5.8%) and Canada(+5.2), and solid in the US (+3.0% core PCE forecast) and Japan(+2.9%).

The Reserve Bank of Australia (RBA) has to be the worst forecaster of wages and incomes in Australia.

ANZ Bank has released a revised outlook for the residential property market, forecasting that house prices in the nation’s capital cities will fall by 8% by the end of 2022 and by 18% between now and the end of 2023.