Latest news with #AnikaFoundation
Sky News AU
4 days ago
- Business
- Sky News AU
RBA backing 'gradual and modest' rate cuts, ANZ chief economist Richard Yetsenga declares after Michele Bullock's speech
Aussie mortgage holders waiting for a flurry of interest rate cuts could have their hopes dashed after Reserve Bank of Australia governor Michele Bullock stood firm on the central bank's controversial rate hold. Ms Bullock addressed the annual Anika Foundation event on Thursday where she said the RBA had expected the unemployment rate to rise in June and noted inflation was declining alongside its forecast. "Last week brought us the latest labour market data, which confirmed that the unemployment rate increased in the June quarter," Ms Bullock said. "Some of the coverage of the latest data suggested this was a shock, but the outcome for the June quarter was in line with the forecast we released in May.' The Australian Bureau of Statistics revealed unemployment jumped 0.2 per cent to 4.3 per cent in June, exceeding market expectations and leading some to question the recent hold. ANZ chief economist Richard Yetsenga was in attendance, and said the RBA governor would likely deliver near term rate relief, but this would not be the start of a cutting spree. 'You would say almost certainly we'll get a cash rate cut next month,' Mr Yetsenga told Business Now on the sidelines of the event. 'But the tone of the speech today I think was consistent with easing still being pretty gradual and modest. 'The market's pricing three, nearly four rate cuts. I don't think the speech was consistent today with that many.' Ms Bullock backed in the rationale behind the central bank's shock rate hold, telling reporters the call came down to 'timing' of inflation data. 'We expect trimmed mean inflation to fall a little further in the June quarter in year-ended terms,' the RBA governor said. 'However, the monthly CPI Indicator data, which are volatile, suggest that the fall may not be quite as much as we forecast back in May. 'We still think it will show inflation declining slowly towards 2.5 per cent, but we are looking for data to support this expectation. 'Encouragingly, as inflation has slowed, the labour market has eased only gradually and the unemployment rate is relatively low.' Every major bank predicts the RBA will cut rates in August and forecasts at least one other cut this year. Westpac predicts the RBA will drop rates four times up until 2026, bringing the cash rate down a full per cent, while CBA and ANZ forecast the cash rate to drop to 3.35 per cent by November. NAB is tipping three more cuts to bring the cash rate down to 3.1 per cent by February. The RBA held the cash rate at 3.85 per cent in July after cutting twice since the beginning of the year.
AU Financial Review
4 days ago
- Business
- AU Financial Review
RBA tempers the doves as it sells its slow and steady strategy
A lot can happen in nine months. When National Australia Bank executive Cathryn Carver introduced Reserve Bank governor Michele Bullock to deliver the annual Anika Foundation address on Thursday, she gave a snapshot of the world in September last year. That was the last time the function was held to raise money to address youth depression. Kamala Harris had momentum in her run for the White House, while in Australia, the Albanese government's grip on power looked shaky. The main act, Bullock, was yet to cut interest rates even as her central banking peers were lowering their settings. Australians were still feeling the strains of higher prices as cost-of-living pressures mounted.
News.com.au
4 days ago
- Business
- News.com.au
‘No magic wand': RBA explains what they are looking for ahead of next rate call
A tight labour market blocked a rate cut in July, but the RBA boss says the central bank isn't looking for mass lay-offs. In her speech at the Anika Foundation Fundraising lunch on Thursday, RBA governor Michele Bullock revealed what the central bank will be looking for when it meets in August to discuss the cash rate. She said the board wanted to see a gradual easing in labour market conditions, that has so far been most evident in fewer job vacancies, reductions in hours worked and declining rates of voluntary job switching. 'These shifts aren't without their challenges, but they all tend to be less disruptive than outright job losses,' she said. Pointing to last week's ABS labour market data, Ms Bullock said it wasn't a 'shock', despite the figures showing job losses spiked to their highest point in more than three years at 4.3 per cent. 'Some of the coverage of the latest data suggested this was a shock – but the outcome for the June quarter was in line with the forecast we released in May,' she said. The RBA forecast unemployment to average 4.2 per cent through the June quarter. She said June monthly data showed a 'noticeable pick-up' in the unemployment rate but when looking at other measures, such as vacancy rates, the jobs market remained stable. 'More broadly, leading indicators are not pointing to further significant increases in the unemployment rate in the near term,' she said. Ms Bullock noted there were signs of a slowing jobs market including falling jobs vacancies and the average hours worked declining, although both remained high compared to historic levels. She said these conditions are challenging for people but they are more favourable than outright job losses. 'Having your hours cut is tough, but it's often preferable to losing a job altogether,' Bullock said, noting some of the decline in hours worked had been voluntary. 'I should note the RBA can't wave a magic wand and control how adjustments in the labour market play out. Interest rates are too blunt an instrument for that. 'Losing a job can be one of the most stressful events in someone's life, and it can have far-reaching implications for families and communities.' The governor highlighted the central bank does not have a jobs target and is not looking for a certain number of job losses. Ms Bullock's speech reinforces the message from the minutes of the RBA's monetary policy board meeting, released on Wednesday, where the central bank revealed a tight labour market was the key blocker of further rate cuts. 'Recent monthly CPI indicator data – which can be volatile and does not cover all items in the CPI – were broadly consistent with this expectation,' the RBA board said. But with more Australians currently in work, the board remained wary the strong employment figures could lead to an increase in inflation. 'The labour market was assessed to have remained tight, with measures of labour utilisation little changed over the prior year,' the minutes read. 'Growth in private demand had begun to recover, but was still subdued.' A cautious RBA monetary board held the official cash rate at 3.85 per cent following its July meeting, with the shock move defying expert commentators and predictions from the money markets. The board voted 6-3 in favour of the hold. 'A minority of members judged that there was a case to lower the cash rate target at this meeting,' the board said. 'These members placed more weight on downside risks to the economic outlook – stemming from a likely slowing in growth abroad and from the subdued pace of GDP growth in Australia.' The RBA monetary policy board will next meet on August 12, with money markets widely forecasting a rate cut.
Yahoo
4 days ago
- Business
- Yahoo
RBA boss gives major rates clue
A tight labour market blocked a rate cut in July, but the RBA boss says Australians won't have to choose between a job and rate relief. In her speech at the Anika Foundation Fundraising lunch on Thursday, RBA governor Michele Bullock revealed what the central bank will be looking for when it meets in August to discuss the cash rate. She said the board was not looking for outright mass job losses, but a gradual easing in labour market conditions that has so far been most evident in fewer job vacancies, reductions in hours worked and declining rates of voluntary job switching. 'These shifts aren't without their challenges, but they all tend to be less disruptive than outright job losses,' she said. Pointing to last week's ABS labour market data, she said the spike in job losses, from 4.1 to 4.3 per cent, was not the silver bullet for future rate cuts that experts forecast. 'Some of the coverage of the latest data suggested this was a shock – but the outcome for the June quarter was in line with the forecast we released in May,' she said. She explained looking only at labour market movements, there were more outright job losses than the RBA had forecast, but other measures such as the vacancy rates were in line with previous central bank predictions. 'More broadly, leading indicators are not pointing to further significant increases in the unemployment rate in the near term,' she said. Ms Bullock said while the board's remit was to balance employment with price stability, the central bank wasn't necessarily looking for job losses. 'I should note the RBA can't wave a magic wand and control how adjustments in the labour market play out. Interest rates are too blunt an instrument for that.' 'Losing a job can be one of the most stressful events in someone's life, and it can have far-reaching implications for families and communities,' she said. Ms Bullock's speech reinforces the message from the minutes of the RBA's monetary policy board meeting, released on Wednesday, where the central bank revealed a tight labour market was the key blocker of further rate cuts. 'Recent monthly CPI indicator data – which can be volatile and does not cover all items in the CPI – were broadly consistent with this expectation,' the RBA board said. But with more Australians currently in work, the RBA was wary the strong employment figures could lead to an increase in inflation. 'The labour market was assessed to have remained tight, with measures of labour utilisation little changed over the prior year,' it said. 'Growth in private demand had begun to recover, but was still subdued.' A cautious RBA monetary board held the official cash rate at 3.85 per cent following its July meeting, with the shock move defying expert commentators and predictions from the money markets. The board voted 6-3 in favour of the hold. 'A minority of members judged that there was a case to lower the cash rate target at this meeting,' the board said. 'These members placed more weight on downside risks to the economic outlook – stemming from a likely slowing in growth abroad and from the subdued pace of GDP growth in Australia.' The RBA monetary policy board will next meet on August 12, with money markets widely forecasting a rate cut.
Daily Mail
4 days ago
- Business
- Daily Mail
More bad news for millions of Aussie borrowers as RBA chief makes pivotal rate cuts decision
The Reserve Bank has declared interest rates won't be slashed in Australia like in other nations because inflation is still too high. While underlying inflation has eased, Governor Michele Bullock says there needs to be evidence that will be stay at the mid-point of its two to three per cent target. The RBA left the cash rate on hold at 3.85 per cent in July, surprising financial markets, but Ms Bullock said borrowers expecting big rate cuts in 2025 and 2026 would be disappointed. 'Interest rates in Australia did not rise as high as they did in some other economies, and so we may not need to lower them as much on the way down,' she told the Anika Foundation Fundraising Lunch in Sydney. Australia's cash rate is much higher than Canada 's 2.75 per cent and New Zealand 's 3.25 per cent. This is despite underlying inflation in May falling to just 2.4 per cent. Ms Bullock said June quarter consumer price index data, due out next week, would have to show underlying inflation being much lower than the March quarter's 2.9 per cent. 'We expect trimmed mean inflation to fall a little further in the June quarter in year-ended terms,' she said. 'However, the monthly CPI Indicator data, which are volatile, suggest that the fall may not be quite as much as we forecast back in May. 'We still think it will show inflation declining slowly towards 2.5 per cent, but we are looking for data to support this expectation.'
