Category Archives: Interest rates

Australia faces prospect of pre-election rate rise as inflation and consumer prices soar

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Annual CPI rate rise to 5.1% was higher than expectations and reflects higher fuel and food costs, sparking fears of an interest rate rise

Australia faces the prospect of a pre-election rate rise by the Reserve Bank after underlying inflation pace soared to its highest in 13 years while the broader consumer price measure increased at the quickest pace since the GST was introduced in 2000.

The 5.1% annual consumer price index (CPI) reading for the March quarter easily topped the market expectation of 4.6% pace. The so-called trimmed mean inflation, which strips out volatile changes and is used by the central bank to set rates, rose 3.7%, or the most since March 2009.

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Australia’s first-home buyers urged to ‘go in with eyes wide open’ about future rate rises

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The good news is more places on offer in the first home guarantee scheme. The bad news could be higher mortgage repayments

Laura Valencic has never had the luxury of calling the “bank of mum and dad” to help her buy a home.

After the federal government announced more places under the first home guarantee scheme in the budget, Valencic feels like she finally has an in. But she’s wary of a potential pitfall in the future: will she be able to afford the mortgage repayments when interest rates rise?

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Australia’s leading economists expect Reserve Bank to hold interest rates low in 2022 | Peter Martin

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Analysis: A panel of forecasters are predicting weaker economic growth and a fall in real wages

Australia’s leading forecasters expect the Reserve Bank to resist pressure to increase interest rates all year, despite rising interest rates overseas, much higher inflation, plunging unemployment and financial market traders pricing in two hikes in the next six months.

The 24-person forecasting panel assembled by the Conversation also predicts weaker economic growth, much lower housing price growth, next to no growth in the Australian share market, little or no further inroads into unemployment and wage growth so weak that real wages go backwards.

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New Zealand interest rate hike raises pressure on central banks over inflation

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RBNZ says homeowners must be ‘incredibly wary’ of rising costs, as focus shifts to policymakers in US, UK and Europe

New Zealand’s central bank has lifted interest rates for the second time in as many months to 0.75%, with many forecasters expecting borrowing costs to rise to at least 2% by next year and possibly higher.

In a warning signal for central banks around the world as they struggle to contain inflationary pressures, the Reserve Bank of New Zealand (RBNZ) raised the official cash rate by 25 basis points to 0.75% as expected in its final policy meeting of the year on Wednesday.

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‘Twilight’ for Australia’s housing boom as prices to fall 10% in 2023, CBA says

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Commonwealth Bank expects a peak in 2022 and then a drop the following year as borrowing costs rise

Australia’s “red hot” property market has started to cool, with prices to peak next year and sink 10% in 2023 as higher borrowing costs and “natural fatigue” set in, the nation’s largest mortgage lender predicts.

Home prices in Sydney, which will post among the fastest gains in 2021 with a forecast 27% jump, will moderate to a 6% advance in 2022, according to Gareth Aird, head of Australian economics for the Commonwealth Bank. By 2023, though, the harbour city’s prices will fall 12%, the equal most of any capital city, matching Hobart’s predicted retreat.

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Fears for 1 million furloughed staff with Sunak set to finally end scheme

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After the success of the chancellors’s £70bn programme, there is uncertainty about the future direction of the economy

The biggest state intervention in the UK’s labour market in peacetime comes to an end this week when the government finally winds up its furlough support.

Barring an unlikely last-minute change of heart, a wage subsidy that has been in place for 18 months and has cost £70bn will no longer be open to struggling firms.

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A year of Covid crisis: a glimmer of economic hope at the end of the tunnel

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Twelve months after the pandemic struck the Guardian’s economic tracker reveals real risk of lasting damage

When Boris Johnson announced the first stay-at-home order, effectively shutting down whole sections of the economy, it was hoped the tide could be turned within 12 weeks. As many months later, lockdown measures are being relaxed for a third time and Britain still faces a lengthy road to recovery from the worst recession for 300 years.

As restrictions ease, the chief economist at the Bank of England, Andy Haldane, warned that despite the reopening of the economy, the risk of a “jobs equivalent of long Covid” remains for workers across the country.

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Is ‘hysterical’ market speculation pushing us towards another crash?

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Despite Covid, global stocks started 2021 on a high. But some analysts warn of an ‘epic’ bubble, amid fears that the flow of stimulus has created a monster

Insurrections are not usually seen by investors as buy signals. Yet even as rioters stormed the seat of US legislative government last week, stock market indices hit new highs in New York, adding another chapter to 12 months of apparent defiance of economic gravity.

Wall Street, measured by the benchmark S&P 500, was not alone in starting 2021 with a bang. London’s FTSE 100 jumped by more than 6% in the first week of the year as investors took in a heady cocktail of a President Joe Biden ready and able to spend money, cheap borrowing costs, and the hopes that vaccines will end the coronavirus lockdowns. Yet amid the exuberance a serious concern looms: are we on the cusp of another colossal crash?

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Bank of England’s QE programme is bigger than the City expected

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Quantitative easing stimulus is equivalent to almost 2% off interest rates

The Bank of England has gone all in. By cutting interest rates to 0.1% and announcing a fresh £200bn of money creation via its quantitative easing programme it has fired all the conventional weapons in its arsenal.

There will be some who say this is all reminiscent of the Beyond the Fringe sketch where Peter Cook demands “a futile gesture” to raise the whole tone of the war. Others will saythe Bank’s new governor Andrew Bailey had no choice given the state of the markets and the imminent lockdown in London. Bailey has had a good first week in the job.

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Coalition should consider increasing bank levy, Labor’s Jim Chalmers says

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Shadow treasurer calls for new banking inquiry after major banks failed to pass on full interest rate cut

Labor says the Morrison government should consider increasing the bank levy in response to the failure by the big players to cut interest rates in line with the central bank, and look at broader measures to boost competition in the sector.

The shadow treasurer, Jim Chalmers, told Sky News on Sunday the government needed to sign off on a new inquiry into competition in the banking sector by the Australian Competition and Consumer Commission, and consider all options, including hiking the bank levy, after the major banks declined to pass through the full rate reduction following the Reserve Bank’s latest cut to the official cash rate.

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Markets jittery as trade war and recession worries spook investors -as it happened

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Beijing has alarmed investors by threatening counter-measures against the US, threatening to escalate the trade war

Earlier:

Update: Britain’s FTSE 100 has hit a new six-month closing low.

The blue-chip index just closed 80 points lower at 7,067, a drop of 1.1%.

Time for a quick recap

Financial markets remain volatile today, as fears of an economic downturn hit stock prices and drive bond prices to new record highs.

Related: Online shoppers and Amazon Prime Day lift UK retail sales

If President Xi would meet directly and personally with the protesters, there would be a happy and enlightened ending to the Hong Kong problem. I have no doubt! https://t.co/eFxMjgsG1K

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Investors await signal on fresh ECB economic stimulus – business live

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Rolling coverage of the latest economic and financial news as Mario Draghi expected to prepare central bank for interest rate cuts

It will be too late for the ECB’s interest rates decision, but the latest measure of German business confidence from the influential Ifo Institute shows that morale has sagged more than expected in July.

The closely followed measure fell to a reading of 95.7 – well below the consensus expectations of 97.1.

Boris Johnson is planning to set out his “priorities for government” in his first appearance as prime minister in the house of commons – at about 10:30am BST.

Perhaps he can shed some more light on what will be happening by 31 October, the Brexit deadline.

Following Business Qs, there will be one government oral statement in the @HouseofCommons today:

The Prime Minister - Priorities for Government

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