Category Archives: Interest rates

Reserve Bank leaves interest rate on hold at 4.35% despite higher than expected inflation

Posted on by

Mortgage holders have avoided another rate rise with the RBA opting to keep rates steady for the fourth consecutive meeting

• Get our morning and afternoon news emails, free app or daily news podcast

Borrowers have been spared a 14th interest rate rise and further increases are not certain as the Reserve Bank of Australia avoids a “tightening bias” even as inflation retreated slower than previously expected.

The RBA left its cash rate on hold at 4.35% for a fourth consecutive meeting on Tuesday in a result that was widely expected. Only one economist, Capital Economics, predicted the central bank would lift the cash rate.

Continue reading...

Most difficult global outlook since 1930s heralds end of US-led world order | Larry Elliott

Posted on by

IMF has revised up growth forecasts but medium-term prospects remain poor as globalisation goes into reverse

The 2020s are almost halfway over and are on course to be the most difficult decade for the global economy since the 1930s. Every finance minister and central bank governor at the spring meeting of the International Monetary Fund in Washington last week knows that, even if they were not prepared to admit it publicly.

The IMF likes to look on the bright side. It revised up slightly its forecast for global growth and now thinks scarring from the coronavirus pandemic and the cost of living crisis will be less severe than it originally feared. Interest rates have risen without triggering the recessions that were predicted. A soft landing has been finessed. The performance of some countries – the US and India to take two examples – has been strong.

Continue reading...

Interest rates need to stay higher for longer, says Bank of England policymaker

Posted on by

Megan Greene dampens hopes of August cut while underlying causes of inflation remain ‘persistent’

Cuts in UK interest rates should be “a way off”, according to a Bank of England policymaker, who has said that inflationary pressures will keep the cost of borrowing higher than financial markets expect.

Megan Greene, a member of the Bank’s nine-member monetary policy committee (MPC), which sets interest rates, said financial markets were betting “in the wrong direction” when they judged how quickly the central bank would make its first rate cut.

Continue reading...

Australia politics live: Catherine King takes aim at Liberals over preselection of women at end of heated question time

Posted on by

Follow the day’s news live

Chalmers: we can have cost-of-living relief and wage growth

Here is how Jim Chalmers was selling the wage submission (at least on ABC TV this morning). The treasurer said it wasn’t a binary choice between cost of living relief and wages growth:

We don’t see cost of living relief as ‘instead of’ decent wages growth. We want to see wages growth on top of the billions of dollars of cost of living relief that the Albanese government is rolling out.

… The tax cuts we’re rolling out for everyone, or cheaper childhood education or cheaper medicines - none of those are a substitute for getting wages growing in the economy once again.

I think if you’ve followed Tasmanian laws, and they’ve worked very well down there and actually your bill is based on that, you might have … a good good bit of airing out there and actually be able to settle this once and for all.

I think there’s a very fine line between having choices … and running … a business or a school or anything else.

People send their kids to faith based schools with expectations and I think we’ve got a walk a very, very fine line with all of that.

Continue reading...

Reserve Bank tipped to hold interest rate but economists split on when cuts will start

Posted on by

Pundits and investors expect the RBA to leave its cash rate unchanged at 4.35% when the board meets on Tuesday

The Reserve Bank is widely tipped to leave its key interest rate on hold at this week’s board meeting, but economists are split on how soon borrowers can expect rate relief.

The central bank will announce the results of its second board meeting for 2024 on Tuesday. Pundits and investors alike anticipate the RBA will leave its cash rate unchanged at its 12-year high of 4.35%.

Sign up for Guardian Australia’s free morning and afternoon email newsletters for your daily news roundup

Continue reading...

Greens-Coalition alliance may force Chalmers to keep power to overrule RBA on rates

Posted on by

Chalmers had announced plans to scrap the veto power but former treasurers and RBA governors say it is a vital ‘safety valve’

An alliance between the Greens and Liberal parties in the Senate could force Jim Chalmers to keep a government power that allows treasurers to overrule Reserve Bank decisions on interest rates.

Chalmers announced plans to scrap the veto power in the government response to recommendations from a panel which reviewed the Reserve Bank operations and made suggestions for improvement.

Sign up for Guardian Australia’s free morning and afternoon email newsletters for your daily news roundup

Continue reading...

UK savers should pick accounts beating rising cost of living while they can

Posted on by

Many best rates are easy access and notice options rather than ones that lock money away

This week’s news that inflation stayed steady at 4% in January means it is still possible to put your money in a savings account with an interest rate that beats the rising cost of living.

Returns on fixed-rate savings accounts have been falling, but, so far, variable rate deals have remained unchanged.

Continue reading...

Bank of England governor dampens hopes of interest rate cut

Posted on by

Andrew Bailey says cost of living had been higher than expected in December despite ‘encouraging’ inflation news

The Bank of England governor has doused hopes that better-than-expected inflation news last month will accelerate cuts in interest rates, stressing the need for further evidence of wage moderation before Threadneedle Street moves.

Appearing before the House of Lords economics committee on Wednesday, Andrew Bailey said it was “encouraging” that inflation had remained unchanged at 4% in January but the previous month’s figure for the cost of living had been higher than predicted.

Continue reading...

UK pay growth slows less than expected as workers bid up wages

Posted on by

December figures prompt predictions Bank of England may cut interest rates later than previously expected

Pay growth slowed less than expected in December, prompting predictions the Bank of England could start cutting interest rates later than previously expected.

Earnings growth, excluding bonuses, fell only modestly to 6.2% in October to December 2023 from a revised 6.7% in the previous three months, as workers continued to bid up their wages amid skills shortages and a record number of people with long-term sickness.

Continue reading...

UK workers must accept lower pay deals to help beat inflation, says Bank ratesetter

Posted on by

Deputy governor Sarah Breeden also says firms must rein in profits as there is ‘some way to go’ to meet 2% inflation target

Victory in the war on inflation will require British workers to accept lower pay deals and companies to rein in their profits, a senior Bank of England policymaker has said.

Sarah Breeden, one of the central bank’s four deputy governors, said there was still “some way to go” before inflation would fall back to the 2% target set by the government for the Bank to achieve on a sustainable basis.

Continue reading...

Australia’s property market upswing continues as house prices and rents rise again

Posted on by

Home values rose 0.4% in January and rents increased 0.8%, but the housing market remained varied around the country

The Australian housing market upswing continued in the first month of 2024 with property values rising another 0.4%.

As house prices rose, renters continued to feel pain, with the national rental index recording its biggest monthly rise since April. Rents were up 0.8% in January, after a 0.65% rise in December.

Continue reading...

Stage-three tax cut changes will have minimal effect on inflation, economists predict

Posted on by

Banks say tax tweaks approved by Anthony Albanese’s cabinet may slow pace of RBA interest rate cuts and further reforms are needed to fill budget shortfalls

The Albanese government’s changes to the stage-three tax cuts won’t reignite inflation, although they may slow the pace of Reserve Bank interest rate cuts and more reforms are needed to close future budget gaps, economists say.

Cabinet has approved a revision to the cuts, legislated in 2019, that extends tax relief to those earning less than $45,000 a year to be paid for by reducing the benefit to higher-income earners, with full details still be formally released.

Continue reading...

UK economy returns to growth amid Black Friday spending lift

Posted on by

GDP rises by 0.3% in November after October decline, with car leasing and video games fuelling bounceback

The UK economy returned to growth in November after a recovery in consumer spending driven by Black Friday sales, with shoppers hunting for bargains as the key Christmas shopping season got under way.

Gross domestic product rose by 0.3% on the month, after a decline of 0.3% in October, according to the Office for National Statistics (ONS). City economists had forecast more modest growth of 0.2%.

Continue reading...

Australia’s property market faces fresh peaks and troughs with slowing prices and interest rates tipped to drop

Posted on by

Price trends are unlikely to be straightforward in 2024, even if the RBA’s next move is a rate reduction

Australia’s “rollercoaster” real estate market faces fresh peaks and troughs in 2024 as the prospect of falling interest rates contend with a recent slowdown in price increases.

Renters, meanwhile, are experiencing smaller increases in payments but the share of income going to rent remains at near-record levels with little relief in sight.

Continue reading...

How a spring UK budget could fire the starting gun for an early election

Posted on by

UK economic prospects are bleak but an agenda-setting fiscal event such as sweeping tax cuts in March offers another roll of the dice

To grasp the nettle, or wait in the hope that things somehow miraculously improve. This is the choice Rishi Sunak will be weighing for the next general election, as the Conservatives limp towards the finishing line of another challenging year.

After Jeremy Hunt announced the government would hold an earlier than anticipated budget, with a date set for 6 March, the possibility of a poll in May, in the afterglow of some electioneering tax cuts, is clearly being given considerable thought.

Continue reading...

Drop in UK inflation is welcome but does not erase two years of pain

Posted on by

Food prices were 29% higher last month than in September 2021, leaving many households still under pressure

At last, UK inflation has fallen far and fast enough to start to match countries such as France, where the annual rate of price rises has reduced at a faster pace this year.

At 3.9% last month, the headline figure remains almost double the 2% target set for the Bank of England but significantly lower than the 11.1% peak in October last year and below the 5.3% target Rishi Sunak set for the end of 2023.

Continue reading...

Bank of England keeps interest rates on hold as concern about economy grows

Posted on by

Interest rates will need to stay high for sufficiently long to return inflation to 2% target

The Bank of England has said Britain is facing a tougher job to crush persistently high inflation than other advanced nations, as it kept interest rates on hold at the highest level since the 2008 financial crisis.

Pushing back against expectations in financial markets for a deep round of interest rate cuts next year, the central bank said there was still a long way to go before it could declare victory on inflation, despite a worsening outlook for the UK’s stagnant economy.

Continue reading...

Australia news live: ABC cancels The Drum; two feared dead in NSW plane crash

Posted on by

Follow the day’s news live

Education review due

Education minister Jason Clare spoke to ABC News Breakfast just earlier about the much-anticipated review into Australia’s education system, released today.

You talk about entrenched disadvantage in our schools, this report tells us we’ve got one of the most segregated school systems in the OECD, not by the colour of your skin but the size of your parents’ pay packet. Children are more likely to fall behind at school if they’re from a poor family and from the bush, but if they’re at a school where a lot of people are experiencing disadvantage it’s even harder to catch up. There’s a number of things we need to do to turn that around.

Continue reading...

Australia news live: Shannon Fentiman announces tilt at Queensland Labor leadership

Posted on by

Follow the day’s news live

Palaszczuk made decision ‘in the interest of the state’, Swan says

ALP national secretary Wayne Swan has spoken to ABC RN about Queensland premier Annastacia Palaszczuk’s resignation announcement yesterday.

That’s always ever present for any leader at any time but I think she made the decision in the interest of the state and I think in her own interest as well.

I think people are sensibly discussing what the options are and if one candidate has a pretty clear majority then I think it would be unlikely that you’d see a battle, because it would simply be very difficult for the government over a period of time when they need to re-establish a leader in the job.

Continue reading...

Bank of England, Fed and ECB poised to leave interest rates on hold

Posted on by

Stubbornly high inflation forces central banks to avoid cuts, but markets expect falls next year

The western world’s largest central banks are poised to keep interest rates on hold this week amid concerns over stubbornly high inflation, despite growing expectations for sharp cuts in borrowing costs next year.

In a crunch week for the global economy, the US Federal Reserve, Bank of England (BoE) and European Central Bank are expected to keep interest rates at their current restrictively high levels to ensure inflation continues to fall back from the highest levels in decades.

Continue reading...