There was no news from the local markets last Friday, however confidence was restored internationally as oil prices have steadied on the back of increased supply, falling below $100 a barrel.
US GDP for Q4 2010 was revised down to 2.8%, form 3.2% and significantly below the 3.5% forecast.
The UK GDP Q4 estimate was also revised lower, with the annual output falling to 1.5%. This was 0.2% lower than initially estimated, and is due to downward revisions in Manufactured and Services output.
The RBA will meet tomorrow; and there is no expectation of a change in the 4.75% cash rate. GDP will also be release this week, and the market is expecting a figure of around 0.6% for the December quarter of 2010.
February 28, 2011
February 25, 2011
Capital Expenditure
Australia’s Private New Capital Expenditure (Capex) revealed a solid return in to growth in Plant, Equipment and Machinery investment. Capex was 6.1% higher for the fourth quarter of 2010, and in combination with Wednesdays rise in non-residential constructions spending; private business investment appears to be booming. The skew in investment appears to once again be directed towards mining, which if current plans are realized, would see Capex in the sector almost double this year, to $102b.
Oil futures came of their highs last night, as Saudi Arabia reported that they would increase their supply on the back of the troubles in neighboring countries.
US jobless claims decreased to below 400k, once again demonstrating the their economy is slowly recovering.
There are no noteworthy events scheduled in Australia today.
Oil futures came of their highs last night, as Saudi Arabia reported that they would increase their supply on the back of the troubles in neighboring countries.
US jobless claims decreased to below 400k, once again demonstrating the their economy is slowly recovering.
There are no noteworthy events scheduled in Australia today.
February 24, 2011
Glenn Stevens Speech: The Commodity Boom
The Governor of the Reserve Bank spoke yesterday morning about the resource boom, and pointed out some careful observations. He mentioned the uncertainty surrounding commodity prices leading into the future, as commodity price cycles historically have not been easy to predict. This said, he did observe that the boom had already broken to higher trend levels (5 year average), and it would be rather extreme to assume that the rise of China and India is a short-term flash in the pan. Given the uncertainty in prices, he did state that significant rises in national income should flow into savings. Hence, it is our view that RBA would not tolerate a clear acceleration in consumption.
Wage growth is again showing signs of picking up again, and continuing the current pattern over the past year. The wage price index rose 1% for Q4, following 1.1% in Q3, accounting for annual growth in wages for 2010 to 3.9%. With long run productivity remaining weak, the RBA will keep on eye on wages as it may cause inflationary pressure if the saving rate deteriorates.
Construction work done rose 0.8% in Q4, a touch below the consensus of 1.3%.
Oil prices have moved higher again overnight, as WTI June futures pushed slightly above $101 a barrel.
Private Capital expenditures expected to be released in Australia today, however the focus will continue to be on the Middle East crisis and the devastation of the New Zealand earthquake.
Wage growth is again showing signs of picking up again, and continuing the current pattern over the past year. The wage price index rose 1% for Q4, following 1.1% in Q3, accounting for annual growth in wages for 2010 to 3.9%. With long run productivity remaining weak, the RBA will keep on eye on wages as it may cause inflationary pressure if the saving rate deteriorates.
Construction work done rose 0.8% in Q4, a touch below the consensus of 1.3%.
Oil prices have moved higher again overnight, as WTI June futures pushed slightly above $101 a barrel.
Private Capital expenditures expected to be released in Australia today, however the focus will continue to be on the Middle East crisis and the devastation of the New Zealand earthquake.
NAB Quarterly Business Survey
The Nab quarterly (Dec) Business Survey was released yesterday, and established that business conditions softened noticeably under the weight of slowing profitability. All industries fell into negative levels, except mining, which saw a boost in confidence on the back of higher spot commodity prices. Despite the fact that confidence and expectations have weakened, long-term capital spending plans have held up, confirming the positive rhetoric from the RBA about the medium to long term.
Tensions in Libya continued to escalate overnight, as stock indices around the world continue to be weighed down on the negativity.
Moody’s have placed Japan’s sovereign rating Aa2 on a negative outlook on their inexorable rise in debt.
Today in Australia, the RBA Governor is speaking on the resource boom. We are expecting a hawkish statement, in line with recent publications and speeches from the Board and its members. The Australian Wage Price Index and Construction Work done for Q4 will also be released today.
Tensions in Libya continued to escalate overnight, as stock indices around the world continue to be weighed down on the negativity.
Moody’s have placed Japan’s sovereign rating Aa2 on a negative outlook on their inexorable rise in debt.
Today in Australia, the RBA Governor is speaking on the resource boom. We are expecting a hawkish statement, in line with recent publications and speeches from the Board and its members. The Australian Wage Price Index and Construction Work done for Q4 will also be released today.
February 22, 2011
Middle East Crisis
There was no news locally yesterday, however developments in the Middle East and North Africa continue to affect the markets. Oil price futures continue to rise as growing concerns over the supply of the commodity to Western nations grows. The area in question accounts for 36% of global oil production, so any affect in output is likely to significantly affect prices and global output. Bloomberg reports that if oil prices jump by a further $20 - $30 USD, it could be a catalyst for a global recession.
Today in Australia, Nab is releasing their Business Survey for the December quarter.
Today in Australia, Nab is releasing their Business Survey for the December quarter.
February 21, 2011
China Tightening
There was no news on the local front last Friday, however information from China reported that the central bank had once again tightened monetary policy. In order to do this, the Peoples Bank of China further increased its banks liquidity ratio by 0.5%, while also appreciating their currency at a faster rate. There appears to be growing concern that China is struggling to contain inflation on the back of their stimulus measures put in place during the GFC. It will be important for the Chinese to keep inflation steady in order to achieve strong, balanced and sustainable growth.
The highlights this week will be the RBA Governor Stevens speaking on Australia and the resource boom at a conference on Wednesday. Private Capital Expenditure will be released on Thursday, and may be a good indicator into current business confidence.
The highlights this week will be the RBA Governor Stevens speaking on Australia and the resource boom at a conference on Wednesday. Private Capital Expenditure will be released on Thursday, and may be a good indicator into current business confidence.
February 18, 2011
Assistant Governor Speech
Yesterday in Australia saw the RBA Assistant Governor, Phillip Lowe, deliver a speech that focused on the strength of global commodity prices and the high household saving ratio. As stated, rising commodity prices will deliver an upside risk to inflation and interest rates, as more money will be flowing through the economy. Meanwhile, if the high savings rate were to fall, consumption would rise and most likely trigger a tightening. The RBA clearly has their eye on the medium term outlook, where growth is expected to rise to 4%, and inflation is predicted to rise as a result of capacity contraints. With this in mind, we are almost certain that the RBA will have to pull in the reigns on the economy later in the year.
US CPI rose by 0.4% in January, above the 0.3% median for 1.6% year on year.
No key data is Australia today; however there may be some interesting developments in tonight’s European session.
US CPI rose by 0.4% in January, above the 0.3% median for 1.6% year on year.
No key data is Australia today; however there may be some interesting developments in tonight’s European session.
February 17, 2011
Motor Vehicle Sales
Figures released yesterday saw Australian motor vehicle sales for the month of January fall by 1.9%, and are down 2.8% year on year. Numbers such as these confirm the statements released in the RBA’s Minutes yesterday, that retail spending remains slow, despite growth in income levels. At this stage, we are still looking to the middle of the year before spending habits begin to change, as the impact of the natural disasters is still in the forefront of people’s minds.
Credit rating agency Moody’s has placed the rating of all the four major banks on review for possible downgrades. The reason for the potential downgrade is that the scale of wholesale funding is too high to justify the credit rating.
The Bank of Queensland has had their second profit downgrade for the summer, as the cyclone/floods have affected the economic conditions of Queensland.
The RBA Assistant Governor is speaking today at CEDA’s 2011 NSW Economic and Political Overview. We are not expecting any surprises, as the RBA has clearly outlined their position on the economy on several occasions.
Credit rating agency Moody’s has placed the rating of all the four major banks on review for possible downgrades. The reason for the potential downgrade is that the scale of wholesale funding is too high to justify the credit rating.
The Bank of Queensland has had their second profit downgrade for the summer, as the cyclone/floods have affected the economic conditions of Queensland.
The RBA Assistant Governor is speaking today at CEDA’s 2011 NSW Economic and Political Overview. We are not expecting any surprises, as the RBA has clearly outlined their position on the economy on several occasions.
RBA Minutes
The RBA’s February Board Meeting Minutes were released yesterday, and restated what we had heard from the RBA over the past several weeks. The medium term outlook on the economy remains strong, despite the few hiccups due to the impact of the floods. The investment outlook remains solid, especially in the resource sector, as increases in global growth forecasts will most likely boost commodity prices. The minutes also made mention of the tight labour market, another indicator of the strength of the economy.
The RBA Minutes did mention that retail spending continues to be subdued, despite increases in household income. The report stated that in the last two CPI results, retail spending had led to more disinflation than expected.
Overall, the RBA remains positive about the economy. As such, they continue to be happy with their slightly restrictive policy stance, given the limited amount of spare capacity within the economy. Although the next move will most likely be a tightening, the RBA will be on hold for some time yet, as subdued consumer spending will provide the Board time to assess the evolving balance of risks in output and inflation.
Other news yesterday saw Chinese CPI come in better than expected, up 4.9%yoy for the month of January, below the 5.4% median.
Today in Australia, February Skilled Vacancies and January Motor Vehicle sales will be released.
The RBA Minutes did mention that retail spending continues to be subdued, despite increases in household income. The report stated that in the last two CPI results, retail spending had led to more disinflation than expected.
Overall, the RBA remains positive about the economy. As such, they continue to be happy with their slightly restrictive policy stance, given the limited amount of spare capacity within the economy. Although the next move will most likely be a tightening, the RBA will be on hold for some time yet, as subdued consumer spending will provide the Board time to assess the evolving balance of risks in output and inflation.
Other news yesterday saw Chinese CPI come in better than expected, up 4.9%yoy for the month of January, below the 5.4% median.
Today in Australia, February Skilled Vacancies and January Motor Vehicle sales will be released.
February 16, 2011
Housing Finance
Housing Finance approvals were 2.1% higher for the month of December, which sees the sixth consecutive monthly rise in the aftermath of the GFC. Since June 2010, the number of loans approved for construction, or the purchase of existing dwellings has risen a combined 5.5%, after declining 20.7% in the six months prior. The positive news for the economy is that there appears to be a stable upward trend emerging. With signs of continued strength in the labour market and healthy population growth, we are likely to see this continue.
On he local front, the RBA minutes for this months meeting are due. After the plethora of recent RBA data/speeches, it is unlikely we will see any surprises from the meeting. China is also set to release their CPI figure today, as fears continue to materialize about the prospects of sustainable levels of high growth.
On he local front, the RBA minutes for this months meeting are due. After the plethora of recent RBA data/speeches, it is unlikely we will see any surprises from the meeting. China is also set to release their CPI figure today, as fears continue to materialize about the prospects of sustainable levels of high growth.
February 14, 2011
Glenn Stevens Speech
The RBA Governor spoke before the Parliament’s Economics Committee on Friday, and appeared to be quite bullish about the economy. He started off by talking about the international scene, noting that China and India have had sustained growth and expansion over recent times. He also mentioned that the United States had been gaining more momentum recently, and that the IMF had lifted its global growth forecast for 2011 to 4.4%, which is considerably above average.
On the local front, Stevens continued to push the RBA’s view of the strong medium term outlook for the Australian economy, as rising global demand for commodities has led to further increases in prices. The RBA remains concerned that consumer spending might rise considerably if caution evaporates, which would place immediate inflationary pressures on the economy. As a result, a strong tightening basis on monetary policy remains.
Housing Finance data will be released today in Australia, however the week’s focus will be on the minutes from the RBA’s last board meeting, to be released tomorrow. China also has data due out this week, with January Trade and CPI.
On the local front, Stevens continued to push the RBA’s view of the strong medium term outlook for the Australian economy, as rising global demand for commodities has led to further increases in prices. The RBA remains concerned that consumer spending might rise considerably if caution evaporates, which would place immediate inflationary pressures on the economy. As a result, a strong tightening basis on monetary policy remains.
Housing Finance data will be released today in Australia, however the week’s focus will be on the minutes from the RBA’s last board meeting, to be released tomorrow. China also has data due out this week, with January Trade and CPI.
February 11, 2011
Jobs Numbers
Yesterdays Labour force report for January was another installment of further growth in employment. 24,000 jobs were created in January, above the market forecast of 17,500, and after a 2000 gain in December. Full time employment declined by 8,000, however part-time jobs were significantly higher, rising by 32,000. So the overall picture is that employment remains strong, with total employment up 3% for the year to January, with full-time employment up 3.4%. The unemployment rate remained steady at 5%.
It must be noted that the employment data must be taken with some caution, as the ABS had operational difficulties in conducting the survey due to the floods. The disruptions to the data have reduced the quality of the estimates, and the numbers are not statistically significant for most of the series taken in Queensland.
In Australia today, the RBA Governor and his senior team will appear before the House of Economics Committee to brief the Parliament on their latest forecasts. We are expecting that he will recognise the short-term uncertainties on the back of the floods, however he will most likely be upbeat about the medium term.
It must be noted that the employment data must be taken with some caution, as the ABS had operational difficulties in conducting the survey due to the floods. The disruptions to the data have reduced the quality of the estimates, and the numbers are not statistically significant for most of the series taken in Queensland.
In Australia today, the RBA Governor and his senior team will appear before the House of Economics Committee to brief the Parliament on their latest forecasts. We are expecting that he will recognise the short-term uncertainties on the back of the floods, however he will most likely be upbeat about the medium term.
February 10, 2011
Consumer Sentiment
The Westpac - Melbourne Institute Consumer Sentiment rose 1.9% for February, however this came after a 5.7%, flood affected decline in January. The latest read was taken during the time cyclone Yasi was moving through the coast of Queensland, so there may have been a higher figure in its absence. Most of the concerns for the year-ahead outlook continued to be present, as worries over damages bills and news of economic damage continued. It still must be noted that the index is now at 106.6%, 6.5% above the long-term average.
In Australia today, January Labour force numbers will be released this morning at 11.30am. The market consensus is currently predicting a rise in employment of 17.5K, and for the unemployment rate to remain steady at 5.0%. Recent indicators such as The ANZ Job Ads and the Nab employment index have been pointing to a slowing in employment growth, so today’s index may confirm these indications.
In Australia today, January Labour force numbers will be released this morning at 11.30am. The market consensus is currently predicting a rise in employment of 17.5K, and for the unemployment rate to remain steady at 5.0%. Recent indicators such as The ANZ Job Ads and the Nab employment index have been pointing to a slowing in employment growth, so today’s index may confirm these indications.
February 09, 2011
NAB Business Survey
The NAB Business survey was released yesterday, and clearly outlined that business conditions had deteriorated sharply in January, in conjunction with the Queensland/Victorian floods. Mining, manufacturing, construction and finance were badly hit, as conditions fell to GFC levels in Queensland. Despite business conditions being poor, business confidence was strong nationally.
The key point that the survey noted was that we are likely to see a -1.5% loss in GDP output for the December and March quarters combined. This is a result of the floods contributing to a loss of workdays, in conjunction with the negative impacts of disruptions to Coal and Agriculture exports.
The Peoples bank of China announced yesterday a further increase in interest rates. Both deposit and loan rates were increased as the Bank continues to try and eradicate the emergence of ‘bubbles’ occurring within the economy. Rates in China are now getting back to a more neutral level.
On the data front today, consumer sentiment will be released. This survey was polled last week after the RBA decided to leave rates unchanged, however it was also hot on the heels of cyclone Yasi. It will be interesting to see how consumers view the outlook of their personal finances as well as their perceptions of the economy.
The key point that the survey noted was that we are likely to see a -1.5% loss in GDP output for the December and March quarters combined. This is a result of the floods contributing to a loss of workdays, in conjunction with the negative impacts of disruptions to Coal and Agriculture exports.
The Peoples bank of China announced yesterday a further increase in interest rates. Both deposit and loan rates were increased as the Bank continues to try and eradicate the emergence of ‘bubbles’ occurring within the economy. Rates in China are now getting back to a more neutral level.
On the data front today, consumer sentiment will be released. This survey was polled last week after the RBA decided to leave rates unchanged, however it was also hot on the heels of cyclone Yasi. It will be interesting to see how consumers view the outlook of their personal finances as well as their perceptions of the economy.
February 08, 2011
Retail Trade Continues to Struggle
Australian Retail sales for the month of December were weaker than market expectations, rising just 0.2%. Department store sales remain weak, down 1.2% for the month, as the sector continues to struggle. In coming months, Retail growth is likely to remain soft, as consumption is expected to take a hit in the first quarter of this year. This, in conjunction with weak credit growth and rising saving rates will see Retail sales remain weak until the aftermath of the natural disasters.
In positive news, the ANZ Job Advertisement series rose a healthy 2.4% in January, higher than the 1.2% rise we saw in December. Once again, Internet advertising was significantly higher, rising by 2.5%, while newspaper ads continue their decline, falling by 0.1%. Despite the floods, Queensland job ads were 1% higher, which pin points the underlying demand for labour in the current environment. More information on the jobs front will be released on Thursday.
No news in Australia today.
In positive news, the ANZ Job Advertisement series rose a healthy 2.4% in January, higher than the 1.2% rise we saw in December. Once again, Internet advertising was significantly higher, rising by 2.5%, while newspaper ads continue their decline, falling by 0.1%. Despite the floods, Queensland job ads were 1% higher, which pin points the underlying demand for labour in the current environment. More information on the jobs front will be released on Thursday.
No news in Australia today.
February 07, 2011
RBA’s Quarterly Statement on Monetary Policy
The RBA quarterly Statement on Monetary Policy was released last Friday, as the publication outlined Australia’s strong medium term outlook. Despite the Queensland floods (Cyclone Yasi was not taken into considerations), there was no downgrade in either GDP or inflation looking into 2012 and onwards. The RBA did adjust their growth and inflation expectation for 2011, downgrading CPI for June 2011 to 2.5%, plus a 0.25% boost, as food prices will rise as a result of the floods. The GDP outlook is expected to be back on target in the June quarter this year, which means that inflationary pressures are likely to escalate during the same period.
The Reserve Bank has also upgraded their terms of trade forecasts, as the prices of commodities such as iron-ore and coal are predicted to continue rising. This comes on the back of renewed confidence about the growth of the Asian region, especially China, in the post GFC era. The RBA also appeared to be less anxious about the global downside risk from the European debt crisis.
In terms of monetary policy, The RBA assumes that there will be a further rise in the cash rate before the year-end, which is in line with market expectations. NAB is expecting two rises before 2012, which they believe will be needed to keep underlying inflation within the RBA’s 2-3% target range.
It will be an important week ahead in the date front, as we start of today with Retail sales for the month of December. Wednesday will see the release of Consumer sentiment, while Employment data is to be released on Thursday. On Friday, Glenn Stevens and his senior team will appear before the House of Representatives Economic committee, and will update the house on the RBA’s views on the economy post the recent natural disasters.
The Reserve Bank has also upgraded their terms of trade forecasts, as the prices of commodities such as iron-ore and coal are predicted to continue rising. This comes on the back of renewed confidence about the growth of the Asian region, especially China, in the post GFC era. The RBA also appeared to be less anxious about the global downside risk from the European debt crisis.
In terms of monetary policy, The RBA assumes that there will be a further rise in the cash rate before the year-end, which is in line with market expectations. NAB is expecting two rises before 2012, which they believe will be needed to keep underlying inflation within the RBA’s 2-3% target range.
It will be an important week ahead in the date front, as we start of today with Retail sales for the month of December. Wednesday will see the release of Consumer sentiment, while Employment data is to be released on Thursday. On Friday, Glenn Stevens and his senior team will appear before the House of Representatives Economic committee, and will update the house on the RBA’s views on the economy post the recent natural disasters.
February 04, 2011
Trade Surplus
Australia’s International trade surplus narrowed in December to $1.98bn, down from $2.08bn in November. On the export front, iron ore volumes were 13% higher, with increases also seen in metal. Imports saw rises in merchandise goods, rising by $643m for the month, with fuels and lubricants also higher. The Queensland floods towards the end of December appear to have had little or no impact on exports, however we are expecting a sizeable fall for January.
In Australia today, all of the attention will be placed on the RBA’s quarterly Statement on Monetary Policy. Judging by Tuesday’s upbeat Board statement, we suspect that the RBA still hasn’t changed their medium term inflation forecasts (2.75%-3%) as GDP and jobs growth appears to be strong. As such, we still see an upside risk to the cash rate despite the short-term negativity.
In Australia today, all of the attention will be placed on the RBA’s quarterly Statement on Monetary Policy. Judging by Tuesday’s upbeat Board statement, we suspect that the RBA still hasn’t changed their medium term inflation forecasts (2.75%-3%) as GDP and jobs growth appears to be strong. As such, we still see an upside risk to the cash rate despite the short-term negativity.
February 03, 2011
Housing Market
Numbers released yesterday demonstrate that Australia’s housing sector continues to struggle, with new home sales falling by 0.6% for December. This follows a 0.2% fall in November, and the seventh monthly fall out of the last eight. The continuous interest rate rises of 2010 appear to be the main culprit, as interest rate expectations of 2011 will be the key driver of home sale activity this year. Nab is predicting house prices across the country to fall by 0.5% over the next 12 months.
More data will be released on the housing front today, as building approvals for December are expected to rise by 2%. Australian Trade numbers are also released, with a $1.7bn trade surplus predicted for the month of December.
More data will be released on the housing front today, as building approvals for December are expected to rise by 2%. Australian Trade numbers are also released, with a $1.7bn trade surplus predicted for the month of December.
Monetary Policy To Stay On Hold For Some Months
The RBA kept rates on hold yesterday and gave the impression that rates will stay the same for some time. The key is their comment about inflation: “The Bank expects that inflation over the year ahead will continue to be consistent with the 2–3 per cent target.”
This has implications for what duration to target in your short-term investments. There is little point, unless you need to for cash flow reasons, in investing for 30 or 60 days. You might as well take advantage of the upward slope in the yield curve to earn some extra yield. Given there next tightening may not be until the middle or end of the year investing for 6 months at some of the 6% and over rates becomes the sensible option. I’m also not adverse to some of the good 1 year rates near 6.50% either as they build in a significant buffer over a 4.75% cash rate.
I’ve summarized some of the key points of the statement below but the above is by far the most important point as inflation is their main focus.
Global Output:- Grew strongly in 2010 particularly China and India. Uncertainty in Europe persists. Global Economy looking strong going into 2011 and commodity prices remaining high.
Australian Terms of Trade:- highest since early 1950s and national income growing strongly. Private investment picking up but household sector subdued with slow credit growth and a bias to savings.
Employment – strong in 2010 and strength to continue but at slower pace. Some wages growth expected over coming year.
Inflation – Underlying at around 2.25% in 2010. This moderate outcomes is being assisted by the high level of the exchange rate, the earlier decline in wages growth and strong competition in some key markets, which have worked to offset large rises in utilities prices
Flooding – expected to subdue growth in short-term and stimulate growth in longer term. The RBA will “look through the estimated effects of these short-term events on activity and prices. The focus of monetary policy will remain on medium-term prospects for economic activity and inflation.”… “The Bank's preliminary assessment is that the net additional demand from rebuilding is unlikely to have a major impact on the medium-term outlook for inflation.”
Other News:
Overnight strong results in manufacturing results reported overnight from a number of key sectors
This has implications for what duration to target in your short-term investments. There is little point, unless you need to for cash flow reasons, in investing for 30 or 60 days. You might as well take advantage of the upward slope in the yield curve to earn some extra yield. Given there next tightening may not be until the middle or end of the year investing for 6 months at some of the 6% and over rates becomes the sensible option. I’m also not adverse to some of the good 1 year rates near 6.50% either as they build in a significant buffer over a 4.75% cash rate.
I’ve summarized some of the key points of the statement below but the above is by far the most important point as inflation is their main focus.
Global Output:- Grew strongly in 2010 particularly China and India. Uncertainty in Europe persists. Global Economy looking strong going into 2011 and commodity prices remaining high.
Australian Terms of Trade:- highest since early 1950s and national income growing strongly. Private investment picking up but household sector subdued with slow credit growth and a bias to savings.
Employment – strong in 2010 and strength to continue but at slower pace. Some wages growth expected over coming year.
Inflation – Underlying at around 2.25% in 2010. This moderate outcomes is being assisted by the high level of the exchange rate, the earlier decline in wages growth and strong competition in some key markets, which have worked to offset large rises in utilities prices
Flooding – expected to subdue growth in short-term and stimulate growth in longer term. The RBA will “look through the estimated effects of these short-term events on activity and prices. The focus of monetary policy will remain on medium-term prospects for economic activity and inflation.”… “The Bank's preliminary assessment is that the net additional demand from rebuilding is unlikely to have a major impact on the medium-term outlook for inflation.”
Other News:
Overnight strong results in manufacturing results reported overnight from a number of key sectors
February 01, 2011
Inflation and Credit Figures
Numbers released yesterday in Australia continue to paint a picture of subdued domestic demand with low inflation pressures. RBA Credit for December rose by just 0.2%, below the forecasted 0.3%, and after a 0.3% rise in November. Personal credit was also lower, falling by 0.4% for December, as consumer spending habits slowed on the back of significant increases in the month’s prior.
The TD-MI CPI gauge in January rose by 0.4%/3.7%, which was slightly higher than the numbers we saw for December. As expected, price rises for fruit and vegetables were high, rising by 12.1%. Despite this, inflation still remains subdued as price rises in other areas of the economy remain passive for the time being.
The RBA Board meet today, and it is almost certain that they will leave the cash rate unchanged at 4.75%. As mentioned, inflation pressures since the last rise have eased significantly, and the RBA will have plenty of time to evaluate the climate before making their next move. The statement that will be released at the time of the announcement may be of some interest, as it will be important to take into account how hawkish the tone of the publication is.
The TD-MI CPI gauge in January rose by 0.4%/3.7%, which was slightly higher than the numbers we saw for December. As expected, price rises for fruit and vegetables were high, rising by 12.1%. Despite this, inflation still remains subdued as price rises in other areas of the economy remain passive for the time being.
The RBA Board meet today, and it is almost certain that they will leave the cash rate unchanged at 4.75%. As mentioned, inflation pressures since the last rise have eased significantly, and the RBA will have plenty of time to evaluate the climate before making their next move. The statement that will be released at the time of the announcement may be of some interest, as it will be important to take into account how hawkish the tone of the publication is.
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