Australian interest rates

What a historic spanking.

Economist Gerard Minack has written a note warning that rebooting Australia’s mass immigration program will crush wage growth and prevent the RBA from achieving its wage targets, which will keep inflation lower for longer: Stagnant incomes and below-target inflation [over the last decade] were due to low wage growth.

Australia’s Consumer Price Index (CPI) came in at 0.8% in the September quarter – in line with market expectations of a 0.8% rise: Annual CPI retraced to 3.0%, missing expectations of a 3.1% rise.

NSW is rotten, politically.

UBS with the note: Investors have challenged the RBA (again), as rate hikes are priced everywhere Market pricing for RBA hikes moved materially in recent weeks, propelled by the shift in global front-end rates.

The Kouk windvane is back: For the first time in many years, central bankers and global investors are witnessing a material pick-up in inflation.

A nice example of how crazy the inflation debate has gotten in the last few weeks comes from Nordea, a generally very sensible crew: The transitory vs.

By Gareth Aird, head of Australian economics at CBA Key Points: We expect the headline CPI to increase by 0.8% in Q3 21 (+3.0/yr). The trimmed mean CPI on our forecasts will print at +0.5% (1.8%/yr).

Aussie bond yields have backed up spectacularly in recent weeks.

Without putting too fine a point on it, macroprudential tightening has been bad for Aussie banks in the past.

UBS with a little note that makes lots of sense.

Courtesy of the always excellent BankingDay: Oceans of liquidity in the banking system are transforming the operational and financial markets sides – but not the policy sides – surrounding the conduct of monetary policy in Australia.

By Gareth Aird, CBA’s head of Australian economics Key Points: Household deposits have risen by more than household credit over the pandemic due to the extraordinary size of government transfer payments. Fiscal stimulus due to the COVID shock has been indirectly funded by RBA bond buying (QE), which constitutes money creation.

The Aussie bond market is on the move and it is sending some pretty whacky signals.

By Gareth Aird, head of Australian economics at CBA: Key Points: CBA data indicates the increase in government payments via the “COVID‑19 disaster payment” to households in lockdown states has been bigger than the fall in wages and salaries.

Phil Lowe in a speech just now: Monetary policy I would now like to turn to monetary policy, where I will focus my remarks on our bond purchase program and the outlook for the cash rate.

RBA governor Phil Lowe today delivered the Bank’s Monetary Policy Decision, which as expected delayed the taper of bond purchases.

Westpac with the note: Following the stubbornly high Victorian case count and the associated decision by the Victorian government to abandon the zero case objective we have reviewed our growth forecasts for the Australian economy.

You have to remember that institutions are like oil tankers.

Forex markets are range trading again.