Category Archives: Interest rates

Bank of England will not take foot off throttle despite drop in inflation

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MPC members will look at other developments in UK and abroad in mission to increase interest rates

The drop in inflation from 10.1% in July to 9.9% last month is not going to trouble the Bank of England’s policymakers when they meet next week to set interest rates. Its monetary policy committee (MPC) is on a mission to increase the cost of borrowing to bring down inflation to 2%. Prices growth that sticks at almost 10% is still too high. One month’s figures are not a trend.

The nine MPC members will also ponder several other developments at home and abroad that can be considered reasons to increase interest rates.

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Federal Icac legislation to be introduced to parliament next week – as it happened

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Gallagher says Labor has not changed position on tax cuts

And on the stage three tax cuts, Katy Gallagher echoed the line the treasurer, Jim Chalmers, started last week and continued yesterday – which is effectively Labor playing dead on the $243bn cuts:

I have been asked this a number of times. You know, we haven’t changed our view on stage three. They don’t come in until 2024.

My sole focus at the moment is putting a budget together for October and what we can do in the short-term to relieve pressure on families. That is what I’m focused on everyday.

Well, the budget we inherited was heaving with a trillion dollars of Liberal party debt. We got deficits as far as the eye can see.

We got some programs that weren’t funded in an ongoing sense that clearly are programs that need ongoing funding.

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Truss ‘irresponsible’ for threatening to review Bank of England remit

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Labour’s Rachel Reeves says Conservatives are ‘playing blame game’ for UK’s economic problems

Liz Truss has been accused of being “deeply irresponsible” for threatening to tinker with the Bank of England’s mandate on the brink of a recession.

The shadow chancellor, Rachel Reeves, attacked the Tory leadership frontrunner after Truss and her allies repeatedly questioned the performance of the Bank’s governor, Andrew Bailey, and said she would review the institution’s remit.

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Bank of England hikes interest rates and says inflation will hit 13%

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Base rate raised by 0.5 percentage points to 1.75%, as Bank says inflation will hit 13% in October

Vladimir Putin’s invasion of Ukraine has left Britain on course for a recession lasting more than a year and inflation above 13%, the Bank of England has warned as it raised interest rates for a sixth successive time.

Threadneedle Street said it had no choice but to increase borrowing costs by 0.5 percentage points to 1.75%, blaming Russia for cost of living pressures not seen in more than four decades and a 5% drop in living standards straddling this year and next – the biggest since records began in the 1960s.

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Commonwealth Bank and ANZ raise variable home loan interest rates by half a point to match RBA rise

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Increase puts the banks’ variable interest rates at highest in three years with Westpac and NAB yet to respond to official cash rate hike

The Commonwealth Bank and ANZ have matched this week’s move by the central bank and raised their variable home loan rates.

CBA’s rates for owner-occupier and investor mortgages will rise by half a percentage point on 12 August.

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Liberal MP Bridget Archer to cross the floor on climate bill – as it happened

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Defence review to be announced

The government is announcing a defence force review today, which it wants completed in about six months. Is this in response to China?

It’s because we need an ADF that is well-positioned to meet our security challenges over the next decade and beyond.

And we have inherited, as you all know, some real capability issues, some of which have been well publicised in the media. It is important that we look at how we ensure the Australian defence force can meet our security challenges, not just now, but in the years ahead. So, you know, I welcomed this and the prime minister and the defence minister will be having – we’ll have more details about this later today.

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Politics live: ‘difficult day for Australians with a mortgage’, Chalmers says; east coast gas shortages in spotlight

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The resources minister, Madeleine King, has taken the first step in reining in the big three LNG exporters by ‘triggering the trigger’

Labor unlikely to extend the fuel excise cut

Asked about the fuel excise in that same interview, Jim Chalmers said:

I’ve been really upfront with people, Charles, for some time now – before the election, during the election and after the election – and pointed out that extending that would cost some billions of dollars and the budget can’t afford that. We’ve inherited a budget which is absolutely heaving with a trillion dollars in Liberal party debt. And when interest rates are rising, it actually costs more and more to service that debt.

The fastest-growing area of government spending in the budget is actually servicing the debt that we’ve inherited because, as interest rates rise, it becomes more expensive to pay that back. So every dollar borrowed, whether it’s by our predecessors or by the new government costs more to pay back and we need to be conscious about that. We need to be responsible about that and upfront about that. And that’s what we’re being.

This isn’t about any one individual. This is about a difficult day for Australians with a mortgage, another difficult day I think everybody is bracing for the interest rate rise that the governor and the Reserve Bank board has flagged.

These decisions are taken independently by the Reserve Bank, by its board and by its governor. People are expecting this outcome today. But it won’t make it any easier.

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Australia’s official interest rates expected to rise by half-percentage point, economists say

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Experts predict RBA will lift cash rate from to 1.85%, marking a 175-basis point increase since May

Australia’s official interest rates are all but certain to be lifted on Tuesday with the expected half-percentage point increase marking the Reserve Bank’s sharpest tightening phase since 1994.

A survey by Bloomberg News found 28 of 30 respondents predict the RBA board will lift the cash rate from 1.35% to 1.85% at its monthly meeting. That move would mark a 175-basis point increase in the rate since it began hiking in May.

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Australian property prices tumble at rates not seen since GFC

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Interest rate rises lead to dwelling values falling for third month in a row with Sydney prices down 5.2% since January

Australia’s property prices are falling at rates comparable to the onset of the global financial crisis or the 1980s downturn as higher interest rates deflate demand. Sydney’s drop, though, is already more precipitous than those earlier eras.

In July alone, dwelling values fell 1.3% on average nationally, marking a third consecutive monthly decline according to CoreLogic, a property data firm. Five of the nation’s eight capitals reported falls, with Sydney down 2.2% and Melbourne retreating 1.5% while prices in Brisbane, Canberra and Hobart were also starting to slide.

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Mortgage holders should brace for short-term pain as RBA signals steady interest rate rises to tackle inflation

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Philip Lowe says reserve bank looking for its ‘neutral rate’ which could see cash rate almost double in coming months

Mortgage holders should brace themselves for interest rate rises of at least another 1.15 percentage points before the end of the year as the Reserve Bank of Australia attempts to hose down inflation before it takes hold of the economy.

The RBA governor, Philip Lowe, said he believed inflation was on track to hit 7% by the end of 2022, with an unemployment rate of 3.5% but said the bank was confident inflation would return to the “target range” of between 2% and 3% in a “short while”.

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UK inflation hits fresh 40-year high of 9.4% as fuel prices rise

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Annual rate in June up from May’s 9.1% figure and exceeds analysts’ expectations

Rising petrol and diesel prices for motorists and dearer food pushed Britain’s annual inflation rate to a fresh 40-year high of 9.4% last month.

Figures from the Office for National Statistics showed the government’s preferred measure of the cost of living – the consumer prices index – was up from May’s 9.1% figure.

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Mortgage holders could face large jump in repayments if interest rates increase by 3%, RBA says

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Deputy reserve bank governor, Michele Bullock, says most Australians are ‘well placed’ to absorb impact of rate rises

Up to 30% of mortgage holders could struggle to keep up with their home repayments if interest rates were to increase by 3%, according to the Reserve Bank of Australia, which says first-home owners, late entrants to the market and low-income loan holders are most at risk.

With the bulk of low fixed-rate loans due to expire in the next two years, about half of those coming into the new variable market will face increases in their repayments of at least 40%. For those whose fixed loans expire in the middle of next year, the reserve bank estimates a median increase of about $650 a month in repayments, or a 45% increase.

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Nobel prize-winning economist Joseph Stiglitz calls for windfall profits tax in Australia

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Tax is a ‘no-brainer’ after companies’ huge profits during Covid but corporate influence makes it ‘politically difficult’, Stiglitz says

The Nobel prize-winning economist Joseph Stiglitz has called for a windfall profits tax, arguing the idea is a “no-brainer” that has been taken off the table due to the influence of big companies.

Stiglitz made the comments to reporters during a tour of Australia after personally lobbying the treasurer, Jim Chalmers, to introduce the tax and warning that excessive interest rate rises could push Europe, the US, and then Australia into recession.

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Jim Chalmers warns of ‘confronting’ inflation and wages forecast in July economic update

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Treasurer says rising interest rates will affect economic growth but Labor has plans to provide cost-of-living support

Australia’s July economic update will contain “confronting” news about lower growth projections and higher inflation cutting real wages, Jim Chalmers has said.

The treasurer said the update to be delivered on Thursday 28 July comes as the global economy is in a “difficult if not dangerous place” due to high debt and rising interest rises to combat inflation.

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Boris Johnson has left the UK economy in a parlous state

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Analysis: If Johnsonomics stands for anything, it is a lack of plan or vision to address Britain’s economic woes

Boris Johnson entered Downing Street in July 2019 with a promise. The doubters, doomsters and gloomsters were going to get it wrong again: his leadership would make Brexit a success, re-igniting an economy stalled by the divisions over Europe.

Three years later, almost to the day, he prepares to leave with the country reeling from a political implosion of his own making, and an economy teetering on the brink of recession.

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Interest rate hikes may send about 200,000 more households into mortgage stress, says analyst

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Households struggling with loan repayments are ‘looking at a deep hole - incomes are not rising but costs are’

Many homeowners may be forced to tighten their belts after the Reserve Bank of Australia lifted the cash rate by half a percentage point, sending an estimated 200,000 households into mortgage stress.

On Tuesday, the RBA raised the official cash rate 50 basis points to 1.35% – the highest since May 2019.

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Sydney house prices still 20% above pre-pandemic levels despite rising interest rates

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Economists say while property prices could come down by up to 20%, affordability has ‘never been worse’

House prices in Sydney remain more than 20% above pre-Covid levels despite rising interest rates, as economists warn housing affordability has “never been worse”.

After hitting record highs in January, Sydney house prices have dropped -1.5%, but remain 22.7% above pre-2020 levels, according to CoreLogic data.

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ASX: Australian stocks close almost 3.6% down after global sell-off on inflation fears

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Benchmark ASX200 index closes 246 points lower, after falling 360 points in the first 15 minutes of trading on Tuesday

Australian shares have joined a global retreat, ending almost 3.6% lower, as investors fear central banks will lift interest rates more aggressively, slashing economic growth and companies’ profits.

The benchmark ASX200 share index of the top 200 companies lost just over 5.2% within the first quarter an hour of trading, or more than 360 points. The losses, though, were pared by the end, with the market ending 246 points lower at 6,686. The Australian dollar also remained below 70 US cents.

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Australia live news update: Wong condemns ‘reckless’ North Korea missile launches; Nine overturns order to hand over drafts

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NSW Appeals Court throws out order requiring Nine Entertainment to hand over draft material; foreign affairs minister labels North Korean ballistic launches ‘reckless and destabilising behaviour’; stripping dual nationals of citizenship unlawful, high court rules; National Disability Insurance Agency chief resigns; Victoria records 25 Covid deaths, Queensland 15, NSW records 10 deaths, WA records eight, ACT records one. Follow all the day’s news

China’s warning to Australia

China has warned Australia to stop “provocations” or face “serious consequences” after the federal government said a Chinese jet plane was intercepted, the AFP and Guardian staff report.

The Australian military plane seriously threatened China’s sovereignty and security and the measures taken by the Chinese military were professional, safe, reasonable and legal.

We can trace Australia’s celebrated connection to the space industry back to the 1950s and as a nation we have to build on that legacy.

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Treasurer warns of ‘severity and magnitude of inflation challenge’ after RBA hikes official interest rate

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Jim Chalmers responds to Reserve Bank decision to lift cash rate 50 basis points as Anthony Albanese declines to comment during Indonesia trip

The treasurer, Jim Chalmers, has described the Reserve Bank’s decision to hike the cash rate by 50 basis points as “difficult” news for homeowners, while warning that inflation will get worse before it gets better.

The prime minister, Anthony Albanese, who is in Indonesia, left the government’s response to the RBA’s higher-than-expected increase on Tuesday to his treasurer as he sought to revive a Keating-era tradition of not commenting on domestic issues while travelling overseas.

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