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☆ Australia's 'Big Four' banks to hike home loan rates to match RBA move
▼ + stars: | 2023-03-09 | by ( ) www.reuters.com time to read: +1 min

March 9 (Reuters) - Australia's so-called 'Big Four' banks said on Thursday they would pass on the central bank's latest quarter-percentage point interest rate hike in full to their home loan customers. Among the top four lenders, the Commonwealth Bank of Australia (CBA.AX), National Australia Bank (NAB.AX), and ANZ Group Holdings (ANZ.AX) will hike their rates from March 17, while Westpac Banking Corp's (WBC.AX) will hike its rates from March 21, the banks said in separate statements. Interest rates in the country have already gone up by 350 bps since last May, when they were at an all-time low of 0.1%. However, RBA Governor Philip Lowe said the central bank was closer to pausing its aggressive cycle of rate increases as policy was now in restrictive territory, and suggested a halt could come as soon as April. Reporting by Navya Mittal and Himanshi Akhand in Bengaluru; Editing by Rashmi AichOur Standards: The Thomson Reuters Trust Principles.

☆ Australia's central bank says closer to pausing on rate hikes
▼ + stars: | 2023-03-08 | by ( Wayne Cole | ) www.reuters.com time to read: +2 min

SYDNEY, March 8 (Reuters) - The head of Australia's central bank on Wednesday said it was closer to pausing its aggressive cycle of rate increases as policy was now in restrictive territory, and suggested a halt could come as soon as April. "At what point it will be appropriate to pause will be determined by the data and our assessment of the outlook." The dovish message saw markets scale back the likely peak for rates to 4.10%, compared to 4.35% a week ago. "More fundamentally, the combination of cost-of-living pressures, higher interest rates and the decline in housing values is weighing on consumption." Reporting by Wayne Cole and Stella Qiu; Editing by Chris Reese and Sam HolmesOur Standards: The Thomson Reuters Trust Principles.

☆ The Fed plans to keep hiking, but Australia is set to pause as it warns of recession risks
▼ + stars: | 2023-03-08 | by ( Jihye Lee | ) www.cnbc.com time to read: +3 min

Brook Attakorn | Moment | Getty ImagesAs Federal Reserve Chair Jerome Powell hints at bigger and possibly faster rate hikes ahead, Australia's central bank could be headed toward a different path. 'Plurals are gone'Comparing the wording from the central bank's previous meeting, Commonwealth Bank of Australia economist Gareth Aird said a pause could come as early as April. "Markets should treat the April Board meeting as 'live' and the RBA could pause," he said in a note shortly after the central bank's announcement. "The reference to assessing 'when' means that the RBA Board has not yet made their mind up around increasing the cash rate in April," he said. Divergence of rhetoricThe Australian dollar hovered at the weakest levels not seen since November 2022 after the central bank's decision.

☆ Asia-Pacific markets poised to fall as Powell hints at higher rates
▼ + stars: | 2023-03-08 | by ( Lee Ying Shan | ) www.cnbc.com time to read: 1 min

Storm clouds are seen over the city skyline on October 01, 2021 in Sydney, Australia. In Australia, the S&P/ASX 200 was down 0.67% as investors digest Reserve Bank of Australia's governor Philip Lowe's speech after the bank's 25 basis point hike the day before. The Nikkei futures contract in Chicago was at 28,200 while its counterpart in Osaka was at 28,210. Both are lower compared to the Nikkei 225's last close at 28,309.16. The Hang Seng futures was at 20,314, a lower figure compared to the Hang Seng index 's last close at 20,534.48.

☆ Italy's Visco raps ECB colleagues in widening hawk-dove divide
▼ + stars: | 2023-03-08 | by ( Gavin Jones | ) www.reuters.com time to read: +2 min

ROME, March 8 (Reuters) - European Central Bank governing council member Ignazio Visco on Wednesday criticized some fellow policymakers for comments on future interest rates that diverged from what had been agreed at ECB meetings. "For this reason I don't appreciate comments by my colleagues regarding future and prolonged increases in rates," Visco added, in unusually blunt remarks that highlight a widening rift at the Frankfurt-based ECB. Visco said that while the ECB had managed to stabilise inflation expectations, geopolitical uncertainties meant economic developments were hard to predict. Other governing council members, considered policy hawks who attach overriding importance to curbing inflation even if it means hurting growth and employment, have gone further. The ECB has no policy meeting in April.

☆ Australia central bank tempers hawkish outlook after hiking rates to over decade high
▼ + stars: | 2023-03-07 | by ( Stella Qiu | ) www.reuters.com time to read: +4 min

In a dovish step, the central bank dropped a reference to further rate "increases", saying instead that "further tightening" would be needed, suggesting that just one more hike might be enough. Rates have already gone up by a whopping 350 basis points since last May, easily the most aggressive tightening campaign by the central bank in modern history. Speculation was rife that the central bank could temper the forward guidance given recent softer data with unemployment rising, economic growth disappointing and wages not climbing as fast as feared. Gareth Aird, economist at Commonwealth Bank of Australia, sees a risk of the RBA could pause in April. "The reference to assessing 'when' means that the RBA Board has not yet made their mind up around increasing the cash rate in April," Aird said.

☆ Australia c.bank raises rates to more than decade high, tempers hawkishness
▼ + stars: | 2023-03-07 | by ( Stella Qiu | ) www.reuters.com time to read: +2 min

Wrapping up its March policy meeting, the Reserve Bank of Australia (RBA) said wages growth was still consistent with the inflation target and recent data suggested a lower risk of a cycle in which prices and wages chase one another. In a dovish step, the central bank changed a reference to further rate "increases", saying instead that "further tightening" would be needed, suggesting that it might be nearing the end of its hike cycle. This was the tenth increase since last May, lifting rates by a total of 350 basis points, easily the most aggressive tightening campaign by the central bank in modern history. Markets reacted by pushing the local dollar down 0.3% to $0.6714 while three-year government bond yields slumped 10 basis points to 3.37% . Australia's economy grew at its weakest pace in a year last quarter, with a quarterly growth of just 0.5%.

☆ Morning Bid: Hopeful market awaits Powell testimony
▼ + stars: | 2023-03-06 | by ( ) www.reuters.com time to read: +2 min

Coming off its best weekly performance since start of the year, the continent-wide STOXX might aim for another record high as traders await January retail sales data for the Eurozone later in the day. Hawkish rhetoric from Fed speakers continued over the weekend, with San Francisco Federal Reserve Bank President Mary Daly the latest to sound a warning on the inflationary threat. The market largely expects Powell to be hawkish this week but given his testimony comes before the jobs report is released, he will likely aim to keep all options open. Over in China, the country's leadership set a 5% target for economic growth this year, which analysts called conservative and pragmatic, as they kicked off the annual session of the National People's Congress. In the corporate world, Italian state lender CDP has bid for the fixed-line network of former phone monopoly Telecom Italia, rivalling an offering from U.S. firm KKR.

☆ ECB confronts a cold reality: companies are cashing in on inflation
▼ + stars: | 2023-03-02 | by ( Francesco Canepa | ) www.reuters.com time to read: +9 min

"It's clear that profit expansion has played a larger role in the European inflation story in the last six months or so," said Paul Donovan, chief economist at UBS Global Wealth Management. "The ECB has failed to justify what it's doing in the context of a more profit-focused inflation story." Instead, national accounts and earnings reports from listed companies are being used as proxies to paint the inflation picture. "The main story of the risks going forward is still that there's a looming wage-price spiral which should make the central bank even more aggressive in hiking interest rates." loadingloadingEven inside the ECB, labour representatives demanding higher pay for central bank staff have distanced themselves from what they described as the institution's "anti-worker bias".

"For energy, food and goods, there’s a lot of forward-looking indicators saying that inflation pressures in all of those categories should come down quite a bit." Other policymakers, including board member Isabel Schnabel and Dutch central bank chief Klaas Knot, have expressed concern core inflation could get stuck and perpetuate inflation. For the ECB to end rate hikes, Lane outlined three criteria. The bank needs lower inflation projections through its three-year forecasting horizon and to make progress in lowering actual underlying inflation. "Actual goods retail prices are still very strong, but the intermediate stage has been a good predictor of price pressures," Lane said.

☆ Morning Bid: Irksome inflation won't die down
▼ + stars: | 2023-02-28 | by ( ) www.reuters.com time to read: +4 min

Friday's latest U.S. inflation surprise was matched in Europe on Tuesday, with French and Spanish headline inflation rates unexpectedly rising again in February - making for an uncomfortable final day of a transformative month for markets. And worryingly, market-based measures of inflation expectations are rising sharply again too. U.S. two-year 'breakeven' inflation rates , taken from inflation-protected Treasury securities, have jumped 80 basis points this month to 2.8% - wiping away the prior assumption that inflation would return to the Fed's 2% target over two years. In Europe, the five year, five-year forward inflation linked swap has jumped 20bps to a 9-month high just under 2.5%. Stock markets steadied after early losses, with U.S. futures only slightly in the red ahead of the open and month end.

☆ Morning Bid: Long March ahead
▼ + stars: | 2023-02-27 | by ( ) www.reuters.com time to read: +5 min

"If it goes down that road it will come at real costs to China," White House national security adviser Jake Sullivan told CNN. China said on Monday it sought dialogue and peace for Ukraine despite the U.S. warnings. European stocks and U.S. futures recaptured some ground on Monday but the DXY dollar index briefly hit its highest since Jan. 6. The new U.S. interest rate horizon remains jarring, however. Meanwhile, Warren Buffett's Berkshire Hathaway (BRKa.N) on Saturday reported its highest-ever annual operating profit, even as foreign currency losses and rising interest rates contributed to lower earnings in the fourth quarter.

☆ Australia advertises job on central bank's policy-setting board
▼ + stars: | 2023-02-23 | by ( ) www.reuters.com time to read: +2 min

SYDNEY, Feb 23 (Reuters) - Australia's government is advertising a job on the policy-setting board of the Reserve Bank of Australia, the first time the powerful position has been thrown open to all comers amid a push for more diversity at the central bank. "The Reserve Bank of Australia is committed to creating a diverse and inclusive workplace, and the Government is committed to ensuring that Australia's institutions appropriately reflect the diversity of our community," said the ad on Australian Public Service. The Reserve Bank Board comprises nine members, with three ex officio members – the Governor, the Deputy Governor and the Secretary to the Treasury – and six non-executive members, who are appointed by the Treasurer. Australian Treasurer Chalmers said he would receive the RBA review on March 31 and would make a decision towards mid-year about whether to extend Governor Philip Lowe's term by another three years. The review, announced by Chalmers in July, is assessing issues such as how the RBA communicates with the public and which inflation targets to follow.

☆ Australia's central bank abandoned pause option for Feb rate hike
▼ + stars: | 2023-02-21 | by ( ) www.reuters.com time to read: +2 min

SYDNEY, Feb 21 (Reuters) - Australia's central bank, startled by the risk that inflation could prove stickier than previously thought, abandoned all thought of pausing at its February policy meeting and signalled more rate hikes would be needed in the months ahead. Minutes of the Feb. 7 policy meeting out on Tuesday showed the Reserve Bank of Australia's (RBA) Board only discussed two options - hiking by 50 basis points or 25 bps. A pattern of upward surprises on inflation and wages had argued for the larger move, the minutes showed. In particular, underlying inflation surprised to the upside in the December quarter. The RBA expects wage growth to top 4.2% by the end of this year.

The economic calendar and market trading grind back into gear on Tuesday, kicking off in Asia with the flash Aussie and Japanese PMIs for February. chartManufacturing activity in Japan has contracted for three months in a row and service-sector activity has expanded for five months, meaning overall economic activity grew in January for the first time in three months. Services and overall business activity as measured by the PMIs have been contracting for four months. This may be a good time to deliver growth-boosting rate cuts or ramp up liquidity injections even more. Here are three key developments that could provide more direction to markets on Tuesday:- Japan flash PMIs (February)- Australia flash PMIs (February)- Reserve Bank of Australia policy meeting minutesBy Jamie McGeever; Editing by Josie KaoOur Standards: The Thomson Reuters Trust Principles.

"Markets are priced for perfection," Schnabel, the head of the ECB's market operations, told Bloomberg. Money markets now show investors betting on a peak ECB rate at around 3.75% by late summer, up from levels around 3.4% earlier this month, as a string of hawkish ECB comments in recent days unwound earlier bets. He and fellow board member Fabio Panetta said the impact of many of the ECB's rate hikes so far had yet to be felt by the economy, with the latter calling for "small steps" going forward. The ECB raised rates by 50 basis points this month and pre-announced another increase of the same size for March 16. But it kept an open mind about future moves, with most policymakers expecting another rate hike in May.

☆ Factbox: Key ECB policymaker comments since Feb rate hike
▼ + stars: | 2023-02-17 | by ( ) www.reuters.com time to read: +4 min

By smoothing our policy rate hikes – that is, moving in small steps – we can ensure that we calibrate (policy) more precisely. Boris Vujcic, Croatian central bank governor, Feb. 10"I would agree that we are likely to see more rate action beyond March." Joachim Nagel, German central bank chief, Feb. 7"From where I stand today we need further, significant rate hikes." Pierre Wunsch, Belgian central bank chief, Feb. 3"I don’t think we're going to move from 50 basis points (in March) to zero. Gediminas Simkus, Lithuanian central bank chief, Feb. 3"The March rate hike is not the last one.

☆ Central banks' inflation fall-guy lives Down Under
▼ + stars: | 2023-02-16 | by ( Antony Currie | ) www.reuters.com time to read: +4 min

MELBOURNE, Feb 16 (Reuters Breakingviews) - If any central bank governor was to feel the heat from the past year’s multiple interest-rate increases, the smart money might have been on the U.S. Federal Reserve’s Jerome Powell. Fast forward and Philip Lowe, governor at the Reserve Bank of Australia, looks most exposed. It would be unfair for Lowe to be the fall guy for central banks’ general inflation failure. The head of the central bank made his comments in front of the Senate Economics Legislation Committee. When questioned about his future at the bank, Lowe said he intended to serve out his seven-year term as governor, which ends in September.

☆ Morning Bid: Growth trumps rates
▼ + stars: | 2023-02-16 | by ( ) www.reuters.com time to read: +6 min

While there were some questions about seasonal adjustments in the data, economists were impressed that sales growth was pretty broad based and have scrambled to re-crunch first quarter U.S. output forecasts as a result. There may be a more mixed picture from Thursday's data slate on producer prices, housing starts and weekly jobless claims. Even though rates futures and Treasury yields ticked back a bit today, pricing now has Fed policy rates moving as high as 5.25% and staying above 5% all year. And while full-year earnings growth estimates for S&P500 companies have sunk to zero, consensus forecasts are now pencilling in a rebound of almost 12% next year. Uncertainty about the pace of growth and annual tax receipts in April makes it difficult for government officials to predict the exact "X-date", it said.

☆ Reserve Bank of Australia says rates have not peaked, path to soft landing narrow
▼ + stars: | 2023-02-15 | by ( ) www.cnbc.com time to read: +2 min

Philip Lowe, governor of the Reserve Bank of Australia, speaks during the Australian Payments Network Summit in Sydney Dec. 14, 2022. Brendon Thorne | Bloomberg | Getty ImagesThe head of the Reserve Bank of Australia (RBA) reiterated on Wednesday that interest rates had not peaked, adding that he was unsure how high they had to go as the central bank, seeking to control inflation, tried to follow a narrow path to a soft landing. When asked about how far interest rates would have to rise, he said policymakers had an open mind. There is a risk that we have not yet done enough with interest rates and spending is more resilient and that inflation stays high." Markets see higher peakThe RBA most recently implemented an interest rates rise on Feb. 7 and said more would come.

☆ Australian central bank governor warns against failing to contain inflation
▼ + stars: | 2023-02-15 | by ( ) www.reuters.com time to read: +1 min

SYDNEY, Feb 15 (Reuters) - The head of Australia's central bank on Wednesday warned of dire consequences of not containing inflation, which is running at three-decade highs. Appearing before members of parliament, Reserve Bank of Australia Governor Philip Lowe said one risk was that the bank might not have done enough on interest rates. "Raising interest rates has always been unpopular ... but our job is to make sure inflation comes down and hopefully preserve the gains of employment that we have made." It's corrosive, it hurts people, it damages income inequality and it if stays high it leads to higher interest rates and more unemployment." Since the central bank began raising interest rates last year, its policy rate has already risen 325 basis points to a decade high of 3.35%.

☆ Dollar finds friends after sticky U.S. inflation readout
▼ + stars: | 2023-02-15 | by ( Tom Westbrook | ) www.reuters.com time to read: +2 min

SINGAPORE, Feb 15 (Reuters) - The dollar found some support on Wednesday after stubbornly high U.S. inflation suggested interest rates are going to remain high for longer than investors had expected. The U.S. dollar climbed to a six-week high of 133.30 yen and sat not far below that at 132.73 early in the Asia session. "Inflation remains too high," Commonwealth Bank of Australia strategist Joe Capurso said. There is not much good news for (the Fed) that is looking for inflation to head down much further towards its 2% target." Federal Reserve officials said the U.S. central bank will need to keep gradually raising interest rates to beat inflation.

☆ Asia stocks fall, dollar stands firm after sticky U.S. CPI
▼ + stars: | 2023-02-15 | by ( Xie Yu | ) www.reuters.com time to read: +2 min

Fed funds futures now imply a peak above 5.2% by mid-year and rates above 5% at year's end. U.S. stocks finished flat on Tuesday but S&P 500 futures dropped 0.4% in Asia. By mid-morning Hong Kong time, MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was down 1.3%, led by drops bigger than 1% in Australia (.AXJO) and Hong Kong (.HSI), and analysts were bracing for further falls. The dollar touched a six-week high of 133.30 Japanese yen overnight and hovered at 132.80 yen on Wednesday. It had a bumpier ride against other currencies following the CPI data, but seems to be pausing following a January slide.

☆ Australia's top central banker to face lawmaker ire over rate hikes
▼ + stars: | 2023-02-13 | by ( ) www.reuters.com time to read: +2 min

SYDNEY, Feb 13 (Reuters) - Australia's top central banker will face a grilling at parliamentary hearings this week after surprising many with a hawkish turn on interest rate hikes that are adding to already punishing cost of living pressures. After the latest rise last week, the central bank compounded the blow by flagging yet further increases would be needed to contain inflation, which is running at three-decade highs. Australian Treasurer Jim Chalmers highlighted the broader issue in the review about how the bank communicates the context for its decisions on Sunday. Chalmers said he would receive the review on March 31, and the government would make a decision about Lowe's re-appointment towards mid-year. The review, announced by Chalmers in July, is assessing issues such as how the RBA communicates with the public and which inflation targets to follow.

☆ Australia c.bank signals more tightening ahead after lifting rates to decade-high
▼ + stars: | 2023-02-07 | by ( Stella Qiu | ) www.reuters.com time to read: +3 min

Three-year government bond yields jumped 15 bps to 3.254% while ten-year yields also surged 15 bps to 3.615%. HIGH INFLATION 'VERY COSTLY'Inflation is expected to decline to 4.75% this year and only slow to around 3% by mid-2025, according to the RBA's latest forecasts. There are signs that consumers are finally pulling back on spending as cost of living surges and rate increases bite. "High inflation makes life difficult for people and damages the functioning of the economy. And if high inflation were to become entrenched in people's expectations, it would be very costly to reduce later," warned Lowe as he signalled the bank's intention to extend the tightening cycle.

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