The RBA, politicised conmen with a gun to the head of the Australian economy

[Engimal v3]

At what point are the RBA going to look at company profits as a source of inflation? Something has gone badly wrong in a society where going to the dentist and getting a haircut is now discretionary spending.

In 4 years we've gone from Labor proposing subsidised dental care to the head of the RBA shaming Australians for going to the dentist

 

[Rotayjay]

They want 4.5% unemployment that's their benchmark

This would be less of a bitter pill if we didn't treat unemployed or underemployed people like criminals in this country and try and starve them to death.

Good point - losing your job doesn't have to be the end of the world, but Australian society chooses to make it so with our uber-expensive housing and low unemployment benefit. It's not just the pathetically low Jobseeker Payment, it's the claims process and the waiting periods too.

This is more for the Centrelink thread, but we need to have a hard, frank conversation as a country when we are saying more of us ought to be put inside the meat grinder of Centrelink.

Dare I say it? It reminds me of Israel and Hamas. Israel says we need to destroy Hamas and it's using civilians as human shields. The Reserve Bank says we need to destroy inflation and unemployment should be 4.5%. Blowing up thousands of children isn't the way to do it, nor is putting thousands of Australians through starvation and homelessness.

 

[Gralin]

Good point - losing your job doesn't have to be the end of the world, but Australian society chooses to make it so. It's not just the pathetically low Jobseeker Payment, it's the claims process and the waiting periods too. This is more for the Centrelink thread, but we need to have a hard, frank conversation as a country when we are saying more of us ought to be put inside the meat grinder of Centrelink.

The issue is our economic system has unemployment baked in.
But our welfare system pretends it's a moral failing of the individual.
Then you've got single parents, people with disabilities, people with serious illness.
Putting people with cancer who can't work because they're having treatment on jobseeker and forcing them onto mutual obligations is barbaric
Refusing people access to jobseeker because their partner is employed helps abusers maintain control of their partners by refusing financial independence.
And we make people burn through all their savings to then access below poverty line payments

 

[peetoo]

Covid travel bans brought it home to me that australia is just one big company town. Our billionaires genuinely believe they own it.

Company town - Wikipedia

en.wikipedia.org

 

[E Shed]

Covid travel bans brought it home to me that australia is just one big company town. Our billionaires genuinely believe they own it.

Company town - Wikipedia

en.wikipedia.org

Reminded me of this. At least the little guy won his case. The big guys had no case to answer.

Crown v Shannon: bigwigs off the hook, small fish fried - Michael West

One guy prosecuted for allegedly running a company while bankrupt, ten Crown directors off scot free for laundering $70bn through casinos

michaelwest.com.au

 

[Kram]

Good point - losing your job doesn't have to be the end of the world, but Australian society chooses to make it so with our uber-expensive housing and low unemployment benefit. It's not just the pathetically low Jobseeker Payment, it's the claims process and the waiting periods too.

This is more for the Centrelink thread, but we need to have a hard, frank conversation as a country when we are saying more of us ought to be put inside the meat grinder of Centrelink.

Dare I say it? It reminds me of Israel and Hamas. Israel says we need to destroy Hamas and it's using civilians as human shields. The Reserve Bank says we need to destroy inflation and unemployment should be 4.5%. Blowing up thousands of children isn't the way to do it, nor is putting thousands of Australians through starvation and homelessness.

Yeah it's a disgrace, unfortunately both majors are fine with situation because there is no votes in fixing it of course.

 

[Kram]

Will the RBA be the last major central bank to cut interest rates?

JPMorgan Asset Management’s Head of Global Rates Seamus Mac Gorain discusses the opportunity set available in fixed income.

www.livewiremarkets.com

What will the RBA do?​

We asked Mac Gorain for his thoughts on whether the "slow to hike, slow to cut" philosophy will apply to the Reserve Bank this time.

"I think that's a fair view," Mac Gorain says. "The hiking cycle is highly correlated across colonies, much more highly correlated than any cycles we've seen in the previous 20 years. You had a common inflation shock and a common inflation response, partly because a lot of the shocks were experienced by everyone."

"What varies a bit is that countries are at a different stage in that descent cycle," Mac Gorain adds. "I think that the descent picture is clearest in the US in the eurozone, and then there are some economies where it's a bit less clear. The UK is one of those economies and Australia is another one of those economies."
There is one thing, however, that Mac Gorain doesn't agree with. Markets are currently pricing in just three RBA rate cuts (from 4.35% to 3.6%) before the middle of 2025 - and Mac Gorain says this is unlikely to materialise.
"That combination is a bit odd," he says. "It's hard to imagine the Fed cutting by a cumulative 100 basis points in the next few years and you won't see more cuts from the RBA. I don't think they've priced enough cuts for the coming years."
What matters more?
While both the start and the pace of rate cuts are important, it's likely the latter will have a larger and more lasting impact on markets.

"There's a reasonable amount of confidence when the first move will come and that means that that second part, of how much they're going to cut, becomes more important and I think the truth is that the second part featuring really deep cuts will only come in a weak growth environment," he says.

Alternatively, Mac Gorain argues there is a third way to ask this same question. It's not just about when central banks start or how much they will cut rates - it's also about where the endgame of this cycle is.
"I think it is likely that rates will end up higher than they did in the most recent cycle. The Fed is still saying that they think the new [terminal] rate is 2.5%. They've had that number for quite a long time but I think that's too low," Mac Gorain says, arguing that fiscal policy has constrained central banks' ability to react to structural changes in the economy.

 

[Kram]

Traders speculate RBA’s next move could be up​

Cecile LefortMarkets reporter
Updated Apr 24, 2024 – 3.53pm, first published at 2.11pm
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The Australian dollar and bond yields jumped after a surprisingly strong inflation report stoked speculation the Reserve Bank may lift the cash rate again to tame above-target inflation that has survived the past 13 rate rises.
The Australian dollar popped 0.6 per cent higher to US65.25¢, having rebounded from a five-month low of US63.60¢ touched last week when the Middle East conflict escalated.
The three-year Australian government bond yield rose to a 2024 peak of 4.04 per cent, after soaring 11 basis points. It was the first time it topped 4 per cent since December.

The RBA has declined to say whether the next move is up or down. Louie Douvis
The RBA cash rate has been on hold at 4.35 per cent since November last year as policymakers assess whether Australia will continue on the narrow path to a soft economic landing and return inflation to its 2 per cent to 3 per cent target.
Bond markets reacted swiftly after Wednesday’s data showed the consumer price index accelerated 1 per cent in the March quarter, from 0.6 per cent, and above forecasts for a 0.8 per cent result. The annual pace, however, slowed to 3.6 per cent from 4.1 per cent.

“It vindicates the view that the market’s pricing of rate cuts was too premature, and it raises some serious questions about whether there’s been sufficient tightening in policy rates,” said Tano Pelosi, a portfolio manager at Antares Capital.

Indeed, financial markets scrambled to reflect the probability of a rate increase, in a sharp resetting of policy expectations. The bond market predicts a 5 per cent chance of a rate rise to 4.6 per cent at the RBA’s policy meeting on May 7. Before the data, it had ascribed a 9 per cent probability to a rate cut next month.

‘Worrying’ details​

Australia is the only major economy where traders are primed for the chance of a rate increase. Even in the United States, which is expanding strongly, traders bet the Federal Reserve will lower the policy rate, albeit not until later this year.
Traders have also erased almost all speculation that the RBA will ease this year, implying just a 6 per cent chance of a rate cut by December, from 70 per cent before the CPI release. The chance of a quarter of a percentage point rate reduction is not fully priced until August 2025.

“If anything, the slew of upside surprises raises the risk that the bank will feel the need to hike rates further,” said Abhijit Surya, an economist at Capital Economics.
Warren Hogan, chief economic adviser at Judo Bank, said the contents of the inflation report were “extremely worrying” and similar to what was happening in the US. He said domestic inflation was stuck at about 4 per cent to 4.5 per cent and not falling in a material way.
“This is a real problem because the worst of all outcomes is the economy starts to pick up this year, and inflation starts to pick up from a high base,” he said.
Last month, RBA governor Michele Bullock said she would not rule anything in or out on policy, meaning interest rates could go up or down. “The numbers today start to tilt the balance of risks back towards rate hikes,” said Mr Hogan. His forecast is under review.
Some pundits still believe the next move is down.
“[The report] will take away the possibility for an early cutting cycle and I now think they will be cutting in Q4 unless unemployment increases quickly,” said Angus Coote, co-founder of Jamieson Coote Bonds. His previous forecast was for a rate cut in August.

 

[Taylor]

Chalmers would be sweating bullets over that

 

[Rob R]

Chalmers would be sweating bullets over that

Will he do anything about insurance companies profiteering and immigration exceeding housing supply driving up rents given they are big causes of inflation?

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[Kram]

Don't worry, Super Nintendo Chalmers will have a cunning plan.

 

[HurleyHepsHird]

Don't worry, Super Nintendo Chalmers will have a cunning plan.

It's clear he is angling for a gig at the Reserve Bank, IMF or World Bank post political career and that he also dreams of being the Australian Blair if given the top job.

Failed Neoliberal orthodoxy to the bones in that bloke.

 

[Taylor]

Watch for Albo to start getting positioned as the supreme leader who made all the choices so they can blame all bad things on him and Chalmers will take over

 

[Rob R]

Watch for Albo to start getting positioned as the supreme leader who made all the choices so they can blame all bad things on him and Chalmers will take over

Albo is very safe until Dutton gets replaced by a competent moderate leader.

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[Kram]

RBA to lift cash rate to 5.1pc, says top forecaster​

Michael ReadEconomics correspondent
Apr 26, 2024 – 5.00am







A resurgent domestic economy and sticky inflation will force the Reserve Bank to do a U-turn and increase its benchmark interest rate three times this year to 5.1 per cent, Judo Bank chief economic adviser Warren Hogan has warned.
After several months of hotter-than-expected data, Mr Hogan has jettisoned his forecast for the RBA to stay on hold until early 2025 and then deliver a rate cut.
Instead, the veteran economist now expects 0.25 of a percentage point rate rises at the RBA’s August, September and November board meetings. That would take the cash rate to 5.1 per cent.
“Everything points to the fact that 4.35 per cent isn’t the right level for the cash rate,” he told The Australian Financial Review.

Judo Bank’s chief economic adviser Warren Hogan: “The RBA’s strategy this cycle doesn’t seem to be working.” Peter Rae
Mr Hogan was the nation’s top economic forecaster in the Financial Review’s first annual ranking of economists in 2023, being the only one of the 29 surveyed analysts to predict the RBA would raise the cash rate five times last year to 4.35 per cent.

Most of his peers forecast the RBA would lift the policy rate only once in 2023, while a handful even predicted interest rate cuts.
“The RBA’s strategy this cycle doesn’t seem to be working,” Mr Hogan said.
“They were hoping we could do less than the rest of the world because we were more exposed to the nominal channel of monetary policy through variable rate mortgages … We just need to now get up to the [cash rate] level that other countries are, at 5 per cent.”
Policy rates are at or above 5 per cent in economies including the United States, New Zealand, Canada and the United Kingdom.

Additional tightening from the RBA could sharpen criticism that federal Treasurer Jim Chalmers’ budget settings are adding to overall demand in an economy still operating at an unsustainable level. The prospect of further rate rises would add weight to calls from economists for Dr Chalmers to run a contractionary budget that took money out of the economy.

Multiple cash rate rises less than a year before the next federal election, due by May 2025, would almost certainly do further damage to the Albanese government’s standing with the electorate. Labor’s position in opinion polls has gradually drifted lower since last year as surveys consistently show high levels of voter concern over the rapid rise in the cost of living.
The latest Australian Financial Review/Freshwater Strategy poll showed Labor level-pegging with the Coalition at 50 per cent on a two-party-preferred vote.
Higher mortgage repayments may potentially fuel public anger with the RBA, which last month shifted to a neutral monetary policy stance, bolstering market and community expectations that rate cuts were imminent.

Economy is still too hot​

Mr Hogan said his decision to change his cash rate forecast was not a kneejerk response to Wednesday’s hotter-than-expected March quarter inflation data, but one that reflected mounting evidence the economy was showing excessive strength.
“This is most clearly evidenced by the elevated number of job vacancies, suggesting businesses are still struggling to source labour and keep up with domestic demand,” he said.


While consumer spending has slowed sharply since the RBA delivered its first cash rate increase in May 2022, business activity has proven resilient.
“This consumer-led slowdown needed to then trigger a business slowdown. Business needed to start pulling back on hiring, and they needed to start pulling back on investment through a profit squeeze,” Mr Hogan said. “But that doesn’t seem to be happening.”
In a sign of the corporate sector’s ongoing strength, the Judo Bank/S&P composite output index has risen for five consecutive months, and now sits at its highest level in two years.
The health of business balance sheets has supported the jobs market, with employment growth continuing into early 2024.
At 3.8 per cent, the unemployment rate is not far off the multi-decade lows reached in 2022, and employers are largely absorbing the record surge in overseas migrants, which the RBA had expected to drive the jobless rate higher.

The entirety of the 122,000 jump in employment so far in 2024 has been full-time work, a traditional barometer of labour market strength.
“The RBA wants to retain the employment gains of the pandemic … meaning they are trying to get rid of inflation without net job losses. That’s fine, but we are creating jobs still,” Mr Hogan said.
“It looks like we’re wandering off the narrow path, and it’s not playing out to plan.”
Cost pressures and high interest rates have also not been enough to force businesses to pull back on capital spending. Investment in machinery and equipment has increased by 7.4 per cent since September 2022. In previous downturns, business investment fell sharply.

“While near zero growth in real consumption spending in 2023 has only happened five times since 1980, the broader economy has been able to withstand both higher interest rates and the slowdown in consumer spending,” Mr Hogan said.

Inflation overshoot​

Stronger-than-expected inflation figures on Wednesday forced economists to push back their forecasts for when the RBA will deliver its first rate cut, though Mr Hogan stands out as the only analyst predicting a rise.
Trimmed mean prices rose 1 per cent in the three months to March 31, higher than both market expectations and the December quarter figure, both of which were 0.8 per cent.
Headline inflation also came in stronger than expected at 1 per cent in the quarter, and 3.6 per cent over the year.
Economists agreed the data would force the RBA to upgrade its near-term inflation forecast when it updates its economic outlook next month. Headline inflation would need to halve to 0.5 per cent in the three months to June 30 for the RBA to realise its forecast for annual price growth of 3.3 per cent.
Mr Hogan said the CPI figures confirmed that domestic inflationary pressures were stubbornly high, suggesting the 4.35 per cent cash rate was not high enough to restore price stability.

The budget pressures that led consumer spending to slow sharply in 2023 were starting to ease.
“The rolling off of fixed-rate mortgages has almost run its course, and with income tax cuts commencing on July 1, we expect to see a major boost to disposable incomes in 2024,” he said.
“While it is still unclear how much of this extra disposable income will be saved and how much will be spent, the early signs are that consumer spending will likely rise again in 2024.”
Without another cash rate increase, the inflation-adjusted cash rate would finish the year at 1 per cent. Mr Hogan said he was worried that the neutral rate, which is the point at which monetary policy is neither contractionary nor expansionary, was closer to 2 per cent, meaning current settings were insufficient to tame inflation.
“Given the damage to their credibility over the pandemic years, it is more important than ever that the RBA ensures they maintain their inflation-fighting credentials with both the financial markets and the broader community,” he said.

RBA to lift cash rate to 5.1pc, says top forecaster

Judo Bank’s Warren Hogan, who was ranked 2023’s most accurate forecaster, predicts a resurgent economy will force the RBA to lift rates to 5.1 per cent.

www.afr.com

 

[blueboy25]

Albo is very safe until Dutton gets replaced by a competent moderate leader.

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Where are they going to find one of those?

 

[Rob R]

RBA to lift cash rate to 5.1pc, says top forecaster

Judo Bank’s Warren Hogan, who was ranked 2023’s most accurate forecaster, predicts a resurgent economy will force the RBA to lift rates to 5.1 per cent.

www.afr.com

Perhaps time for the govt to actually do something like :

Crack down on profiteering rather than just talk about it

Cut immigration now not in a year

Review the tax cuts which whilst not as bad as the previous version are still inflationary.

Of course, they will just talk and set-up inquiries to report next year.

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[Gralin]

Perhaps time for the govt to actually do something like :

Crack down on profiteering rather than just talk about it

Cut immigration now not in a year

Review the tax cuts which whilst not as bad as the previous version are still inflationary.

Of course, they will just talk and set-up inquiries to report next year.

On SM-A125F using BigFooty.com mobile app

Royal commissions, senate inquires, reports, its all just a pressure relief valve to say they are doing something without actually doing anything

they act like the problems we are experiencing aren't a normal function of the system with how they've set it up

this is exactly the end result that you get when you reduce competition and deregulate a market

the profit driver means the incentive is there for price gouging

coles and woolworths have been doing this for years and slowly getting worse and worse and its just been ignored

 

[peetoo]

Perhaps time for the govt to actually do something like :

Crack down on profiteering rather than just talk about it

Cut immigration now not in a year

Review the tax cuts which whilst not as bad as the previous version are still inflationary.

Of course, they will just talk and set-up inquiries to report next year.

On SM-A125F using BigFooty.com mobile app

Can they legally refuse entry to a person they have issued a visa to already? How would you feel if it happened to you?

Changes in immigration policy have a natural time lag


Not one piece of commentary says the tax cuts are anything like inflationary. It would certainly help to allow the liberals (the architects of the genesis of many current problems) get their thieving mitts on the treasury again

 

[Gralin]

Can they legally refuse entry to a person they have issued a visa to already? How would you feel if it happened to you?

Changes in immigration policy have a natural time lag


Not one piece of commentary says the tax cuts are anything like inflationary. It would certainly help to allow the liberals (the architects of the genesis of many current problems) get their thieving mitts on the treasury again

they literally just cancelled a bunch of visas while the plane was in the air and made it turn back around and head back to the middle east in the last six weeks

so yeah they can pretty much do whatever they want there and it can only be challenged in court

 

[The Cryptkeeper]

RBA to lift cash rate to 5.1pc, says top forecaster

Judo Bank’s Warren Hogan, who was ranked 2023’s most accurate forecaster, predicts a resurgent economy will force the RBA to lift rates to 5.1 per cent.

www.afr.com

There's plenty of opinions out there coming from so called "experts" mate. This guy has changed his position so I am not sure I am taking him too seriously. He got the hikes right at the start but anybody who passed year 8 economics knew what would happen once all of the covid stimulus kicked in.

I am not buying into this sort of hysteria. Whilst I do not think rates will come down until late this year or probably the first half of next, I think it is scaremongering to be openly stating an expectation of three more increases in the short term.

 

[peetoo]

Risk is a two speed or multi speed economy

 

[Rob R]

Can they legally refuse entry to a person they have issued a visa to already? How would you feel if it happened to you?

Changes in immigration policy have a natural time lag


Not one piece of commentary says the tax cuts are anything like inflationary. It would certainly help to allow the liberals (the architects of the genesis of many current problems) get their thieving mitts on the treasury again

Most experts (except a few like AMP) thought the inflationary impacts based on expected conditions would be marginal not nil. Conditions have changed for the worse.

I wouldn't like it if I had a visa and it was cancelled but nations have the right and arguably obligation to refuse entry if it is in the best interests of their nation.


Please note that these are suggestions for things the government could do, best option is to fix the grotesque profiteering that is happening.

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