Mutch Financial Services - Darryl Mutch

RBA RATE ANNOUNCEMENT - no change. It is looking like the possibility of an increase due to rising inflation is looking more and more unlikely.

Today’s (6 August) decision marks the sixth consecutive cash rate hold since the Melbourne Cup Day hike in 2023.

Following the decision, the RBA board stated: "The economic outlook is uncertain and recent data have demonstrated that the process of returning inflation to target has been slow and bumpy."

"To date, longer-term inflation expectations have been consistent with the inflation target and it is important that this remain the case.

"Inflation in underlying terms remains too high, and the latest projections show that it will be some time yet before inflation is sustainably in the target range.

"Data have reinforced the need to remain vigilant to upside risks to inflation and the Board is not ruling anything in or out. Policy will need to be sufficiently restrictive until the Board is confident that inflation is moving sustainably towards the target range," the board stated.

Check out the full minutes at RBA website.

Reserve Bank of Australia We are Australia's central bank. We conduct monetary policy, work to maintain a strong financial system and issue the nation's currency.

INFLATION DATA - higher but overall not above expectations.

The Australian Bureau of Statistics’ (ABS) latest Consumer Price Index (CPI) data for the June quarter 2024 has revealed a quarterly rise of 1 per cent, and an annual rise of 3.8 per cent.

The RBA wants inflation to sit at around 3 per cent.

The main drivers for inflation this quarter were housing (1.1 per cent) and food & non-alcoholic beverages (1.2 per cent), according to the ABS.

Rents and new dwellings purchased by owner-occupiers increased.

Wages / labour costs were up 1.1 per cent. Services also continue to increase.

While CPI needs to start moving down again I just can’t see an increase happening in August🤞

Australian Bureau of Statistics Australia's national statistical agency providing trusted official statistics on a wide range of economic, social, population and environmental matters.

INFLATION DATA not looking good all! This from the Australian Bureau of Statistics today:

The monthly Consumer Price Index (CPI) indicator rose 4.0 per cent in the 12 months to May 2024, up from 3.6 per cent in April, according to the latest data from the Australian Bureau of Statistics (ABS).

The most significant contributors to the annual rise to May were Housing (+5.2 per cent), Food and non-alcoholic beverages (+3.3 per cent), Transport (+4.9 per cent), and Alcohol and to***co (+6.7 per cent).

Michelle Marquardt, ABS head of prices statistics, said: "CPI inflation is often impacted by items with volatile price changes like Automotive fuel, Fruit and vegetables, and Holiday travel. It can be helpful to exclude these items from the headline CPI to provide a view of underlying inflation, which was 4.0 per cent in May, down from 4.1 per cent in April."

My key take is in the last paragraph. The items we can control is falling but only just!

RBA RATE ANNOUNCEMENT The Reserve Bank of Australia (RBA) has held the official cash rate steady at 4.35 per cent during its June monetary policy meeting.

This cash rate decision has marked the 4th hold for 2024, and the 5th consecutive hold since December 2023.

In the Statement by the Reserve Bank Board following the decision, the RBA noted: "The economic outlook remains uncertain and recent data have demonstrated that the process of returning inflation to target is unlikely to be smooth."

"Inflation is easing but has been doing so more slowly than previously expected and it remains high. The board expects that it will be some time yet before inflation is sustainably in the target range. While recent data have been mixed, they have reinforced the need to remain vigilant to upside risks to inflation.

The RBA has reiterated that it will continue to rely on emerging data and the evolving assessment of risks.

"In doing so, it will continue to pay close attention to developments in the global economy, trends in domestic demand, and the outlook for inflation and the labour market."

MORE AT

Reserve Bank of Australia We are Australia's central bank. We conduct monetary policy, work to maintain a strong financial system and issue the nation's currency.

RBA RATE ANNOUNCEMENT The Reserve Bank of Australia (RBA) has opted to maintain the cash rate at 4.35 per cent. Following discussions on the 6-7 of May, the monetary policy board announced its final rate decision for May this afternoon (7 May), revealing that it will be holding the official cash rate at its current level. The last time the cash rate moved was in November 2023.

More at

Reserve Bank of Australia We are Australia's central bank. We conduct monetary policy, work to maintain a strong financial system and issue the nation's currency.

RBA RATE UPDATE The Reserve Bank of Australia (RBA) has left the official cash rate unchanged at 4.35 per cent during its March meeting.

This was expected, with the majority of economists predicting a rate cut in the next 12 months.

Speaking during the House of Representatives standing committee on 9 February, RBA governor Michele Bullock stated the Reserve Bank may consider cutting interest rates before inflation hits the target band of 2-3 per cent.

More at

Reserve Bank of Australia We are Australia's central bank. We conduct monetary policy, work to maintain a strong financial system and issue the nation's currency.

RBA ANNOUNCEMENT - no change.

Changes coming! The RBA will now meet eight times a year (every 6 weeks) instead of 11, with cash rate meetings being spread over two days.

The board stated, “While there are encouraging signs, the economic outlook is uncertain and the board remains highly attentive to inflation risks."

"Returning inflation to target within a reasonable timeframe remains the board’s highest priority. This is consistent with the RBA’s mandate for price stability and full employment.

"The board needs to be confident that inflation is moving sustainably towards the target range. To date, medium-term inflation expectations have been consistent with the inflation target and it is important that this remains the case.

"The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks, and a further increase in interest rates cannot be ruled out,".

Rates in the US are expected to come down before mid-year. This should impact rates in Australia as well.

Full commentary available at

Reserve Bank of Australia We are Australia's central bank. We conduct monetary policy, work to maintain a strong financial system and issue the nation's currency.

RATE ANNOUNCEMENT - The Reserve Bank of Australia has made its decision on 2023’s final cash rate - NO CHANGE!

In its final monetary policy meeting for the year, the Reserve Bank of Australia (RBA) has decided to hold the cash rate at 4.35 per cent. This decision marked the sixth cash rate hold for 2023.

RBA governor Michelle Bullock stated following the decision: "Higher interest rates are working to establish a more sustainable balance between aggregate supply and demand in the economy. The impact of the more recent rate rises, including last month's, will continue to flow through the economy."

"Holding the cash rate steady at this meeting will allow time to assess the impact of the increases in interest rates on demand, inflation and the labour market.

There are still significant uncertainties around the outlook. While there have been encouraging signs on goods inflation abroad, services price inflation has remained persistent and the same could occur in Australia," Ms Bullock said.

Ms Bullock further stated: "Whether further tightening of monetary policy is required to ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks."

Full minutes at

Reserve Bank of Australia We are Australia's central bank. We conduct monetary policy, work to maintain a strong financial system and issue the nation's currency.

RBA ANNOUNCEMENT The Reserve Bank of Australia (RBA) has announced its decision to lift the official cash rate by 0.25 per cent from 4.1 per cent to 4.35 per cent. This cash rate hike followed four consecutive holds beginning in July 2023, and now sits at its highest point since November 2011.

RBA RATES - no change! Here are the RBA minutes:

At its meeting today, the Board decided to leave the cash rate target unchanged at 4.10 per cent and the interest rate paid on Exchange Settlement balances unchanged at 4.00 per cent.

Interest rates have been increased by 4 percentage points since May last year. The higher interest rates are working to establish a more sustainable balance between supply and demand in the economy and will continue to do so. In light of this and the uncertainty surrounding the economic outlook, the Board again decided to hold interest rates steady this month. This will provide further time to assess the impact of the increase in interest rates to date and the economic outlook.

Inflation in Australia has passed its peak but is still too high and will remain so for some time yet. Timely indicators on inflation suggest that goods price inflation has eased further, but the prices of many services are continuing to rise briskly and fuel prices have risen noticeably of late. Rent inflation also remains elevated. The central forecast is for CPI inflation to continue to decline and to be back within the 2–3 per cent target range in late 2025.

Growth in the Australian economy was a little stronger than expected over the first half of the year. But the economy is still experiencing a period of below-trend growth and this is expected to continue for a while. High inflation is weighing on people’s real incomes and household consumption growth is weak, as is dwelling investment. Notwithstanding this, conditions in the labour market remain tight, although they have eased a little. Given that the economy and employment are forecast to grow below trend, the unemployment rate is expected to rise gradually to around 4½ per cent late next year. Wages growth has picked up over the past year but is still consistent with the inflation target, provided that productivity growth picks up.

Returning inflation to target within a reasonable timeframe remains the Board’s priority. High inflation makes life difficult for everyone and damages the functioning of the economy. It erodes the value of savings, hurts household budgets, makes it harder for businesses to plan and invest, and worsens income inequality. And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later, involving even higher interest rates and a larger rise in unemployment. To date, medium-term inflation expectations have been consistent with the inflation target and it is important that this remains the case.

The recent data are consistent with inflation returning to the 2–3 per cent target range over the forecast period and with output and employment continuing to grow. Inflation is coming down, the labour market remains strong and the economy is operating at a high level of capacity utilisation, although growth has slowed.

There are significant uncertainties around the outlook. Services price inflation has been surprisingly persistent overseas and the same could occur in Australia. There are also uncertainties regarding the lags in the effect of monetary policy and how firms’ pricing decisions and wages respond to the slower growth in the economy at a time when the labour market remains tight. The outlook for household consumption also remains uncertain, with many households experiencing a painful squeeze on their finances, while some are benefiting from rising housing prices, substantial savings buffers and higher interest income. And globally, there remains a high level of uncertainty around the outlook for the Chinese economy due to ongoing stresses in the property market.

Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will continue to depend upon the data and the evolving assessment of risks. In making its decisions, the Board will continue to pay close attention to developments in the global economy, trends in household spending, and the outlook for inflation and the labour market. The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome.

Reserve Bank of Australia We are Australia's central bank. We conduct monetary policy, work to maintain a strong financial system and issue the nation's currency.

RBA ANNOUNCEMENT - no change!

Here are the minutes from the meeting:

At its meeting today, the Board decided to leave the cash rate target unchanged at 4.10 per cent and the interest rate paid on Exchange Settlement balances unchanged at 4.00 per cent.

Interest rates have been increased by 4 percentage points since May last year. The higher interest rates are working to establish a more sustainable balance between supply and demand in the economy and will continue to do so. In light of this and the uncertainty surrounding the economic outlook, the Board again decided to hold interest rates steady this month. This will provide further time to assess the impact of the increase in interest rates to date and the economic outlook.

Inflation in Australia has passed its peak and the monthly CPI indicator for July showed a further decline. But inflation is still too high and will remain so for some time yet. While goods price inflation has eased, the prices of many services are rising briskly. Rent inflation is also elevated. The central forecast is for CPI inflation to continue to decline and to be back within the 2–3 per cent target range in late 2025.

The Australian economy is experiencing a period of below-trend growth and this is expected to continue for a while. High inflation is weighing on people’s real incomes and household consumption growth is weak, as is dwelling investment. Notwithstanding this, conditions in the labour market remain tight, although they have eased a little. Given that the economy and employment are forecast to grow below trend, the unemployment rate is expected to rise gradually to around 4½ per cent late next year. Wages growth has picked up over the past year but is still consistent with the inflation target, provided that productivity growth picks up.
Returning inflation to target within a reasonable timeframe remains the Board’s priority. High inflation makes life difficult for everyone and damages the functioning of the economy. It erodes the value of savings, hurts household budgets, makes it harder for businesses to plan and invest, and worsens income inequality. And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later, involving even higher interest rates and a larger rise in unemployment. To date, medium-term inflation expectations have been consistent with the inflation target and it is important that this remains the case.

The recent data are consistent with inflation returning to the 2–3 per cent target range over the forecast horizon and with output and employment continuing to grow. Inflation is coming down, the labour market remains strong and the economy is operating at a high level of capacity utilisation, although growth has slowed.
There are significant uncertainties around the outlook. Services price inflation has been surprisingly persistent overseas and the same could occur in Australia. There are also uncertainties regarding the lags in the effect of monetary policy and how firms’ pricing decisions and wages respond to the slower growth in the economy at a time when the labour market remains tight. The outlook for household consumption also remains uncertain, with many households experiencing a painful squeeze on their finances, while some are benefiting from rising housing prices, substantial savings buffers and higher interest income. And globally, there is increased uncertainty around the outlook for the Chinese economy due to ongoing stresses in the property market.

Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will continue to depend upon the data and the evolving assessment of risks. In making its decisions, the Board will continue to pay close attention to developments in the global economy, trends in household spending, and the outlook for inflation and the labour market. The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.

The Reserve Bank of Australia (RBA) has confirmed it will hold the official cash rate at 4.10 per cent today (1 August 2023) for the second consecutive month.

This is the first time the central bank has held the cash rate steady for two consecutive months in over a year (the last time being March–April 2022) and the third time the cash rate has been paused since May 2022.

RBA governor Philip Lowe said in the post-decision statement: "The higher interest rates are working to establish a more sustainable balance between supply and demand in the economy and will continue to do so."

"In light of this and the uncertainty surrounding the economic outlook, the Board again decided to hold interest rates steady this month.

"This will provide further time to assess the impact of the increase in interest rates to date and the economic outlook," Mr Lowe said.

However, the outgoing RBA governor added that "some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe" depending on data and the evolving assessment of risk.

He concluded that the board will continue to pay close attention to developments in household spending, the global economy and the outlook for inflation and the labour market.

New governor, new dates

The August rate decision is the second-to-last cash rate decision to be announced before RBA governor Philip Lowe steps down from his position.

He is set to finish his seven-year tenure as governor on 17 September 2023. Michele Bullock will become the next governor of the RBA and the first female governor of the central bank.

Ms Bullock will begin her new role as governor on 18 September and run for a seven-year term.

The RBA is also set to undergo a shake-up once the new governor takes charge, including by reducing the number of meetings it has in 2024.

From next year, the board will meet eight times a year instead of 11 times. The meeting dates will be as follows:

5–6 February
18–19 March
6–7 May
17–18 June
5–6 August
23–24 September
4–5 November
9–10 December

Read more on

Reserve Bank of Australia We are Australia's central bank. We conduct monetary policy, work to maintain a strong financial system and issue the nation's currency.

RBA RATE ANNOUNCEMENT - no change. I fear they are going to give it a month or so for data to catch up before maybe going again.

Here’s the minutes…

At its meeting today, the Board decided to leave the cash rate target unchanged at 4.10 per cent and the interest rate paid on Exchange Settlement balances unchanged at 4.00 per cent.

Interest rates have been increased by 4 percentage points since May last year. The higher interest rates are working to establish a more sustainable balance between supply and demand in the economy and will continue to do so. In light of this and the uncertainty surrounding the economic outlook, the Board decided to hold interest rates steady this month. This will provide some time to assess the impact of the increase in interest rates to date and the economic outlook.

Inflation in Australia has passed its peak and the monthly CPI indicator for May showed a further decline. But inflation is still too high and will remain so for some time yet. High inflation makes life difficult for everyone and damages the functioning of the economy. It erodes the value of savings, hurts household budgets, makes it harder for businesses to plan and invest, and worsens income inequality. And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later, involving even higher interest rates and a larger rise in unemployment. For these reasons, the Board’s priority is to return inflation to target within a reasonable timeframe.

Growth in the Australian economy has slowed and conditions in the labour market have eased, although they remain very tight. Firms report that labour shortages have lessened, yet job vacancies and advertisements are still at very high levels. Labour force participation is at a record high and the unemployment rate remains close to a 50-year low. Wages growth has picked up in response to the tight labour market and high inflation. At the aggregate level, wages growth is still consistent with the inflation target, provided that productivity growth picks up.

The Board remains alert to the risk that expectations of ongoing high inflation will contribute to larger increases in both prices and wages, especially given the limited spare capacity in the economy and the still very low rate of unemployment. Accordingly, it will continue to pay close attention to both the evolution of labour costs and the price-setting behaviour of firms.

The Board is still expecting the economy to grow as inflation returns to the 2–3 per cent target range, but the path to achieving this balance is a narrow one. A significant source of uncertainty continues to be the outlook for household consumption. The combination of higher interest rates and cost-of-living pressures is leading to a substantial slowing in household spending. While housing prices are rising again and some households have substantial savings buffers, others are experiencing a painful squeeze on their finances. There are also uncertainties regarding the global economy, which is expected to grow at a below-average rate over the next couple of years.

Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve. The decision to hold interest rates steady this month provides the Board with more time to assess the state of the economy and the economic outlook and associated risks. In making its decisions, the Board will continue to pay close attention to developments in the global economy, trends in household spending, and the forecasts for inflation and the labour market. The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.

Reserve Bank of Australia We are Australia's central bank. We conduct monetary policy, work to maintain a strong financial system and issue the nation's currency.

RATE UPDATE - No relief given by the RBA. Rates are going up again by 0.25%.

RBA has said they will focus the following:

1. how the world is dealing with the same issues of inflation, wages growth and spending
2. household spending
3. wages and productivity in the labour market

I fear our chance of avoiding a recession is now getting slimmer each month.

MINUTES FROM RBA

At its meeting today, the Board decided to increase the cash rate target by 25 basis points to 4.10 per cent. It also increased the interest rate paid on Exchange Settlement balances by 25 basis points to 4.00 per cent.

Inflation in Australia has passed its peak, but at 7 per cent is still too high and it will be some time yet before it is back in the target range. This further increase in interest rates is to provide greater confidence that inflation will return to target within a reasonable timeframe.

High inflation makes life difficult for people and damages the functioning of the economy. It erodes the value of savings, hurts family budgets, makes it harder for businesses to plan and invest, and worsens income inequality. And if high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later, involving even higher interest rates and a larger rise in unemployment. Recent data indicate that the upside risks to the inflation outlook have increased and the Board has responded to this. While goods price inflation is slowing, services price inflation is still very high and is proving to be very persistent overseas. Unit labour costs are also rising briskly, with productivity growth remaining subdued.

Growth in the Australian economy has slowed and conditions in the labour market have eased, although they remain very tight. The unemployment rate increased slightly to 3.7 per cent in April and employment growth has moderated. Firms report that labour shortages have eased, although job vacancies and advertisements are still at very high levels.

Wages growth has picked up in response to the tight labour market and high inflation. Growth in public sector wages is expected to pick up further and the annual increase in award wages was higher than it was last year. At the aggregate level, wages growth is still consistent with the inflation target, provided that productivity growth picks up.

The Board remains alert to the risk that expectations of ongoing high inflation contribute to larger increases in both prices and wages, especially given the limited spare capacity in the economy and the still very low rate of unemployment. Accordingly, it will continue to pay close attention to both the evolution of labour costs and the price-setting behaviour of firms.

The Board is still seeking to keep the economy on an even keel as inflation returns to the 2–3 per cent target range, but the path to achieving a soft landing remains a narrow one. A significant source of uncertainty continues to be the outlook for household consumption. The combination of higher interest rates and cost-of-living pressures is leading to a substantial slowing in household spending. Housing prices are rising again and some households have substantial savings buffers, although others are experiencing a painful squeeze on their finances. There are also uncertainties regarding the global economy, which is expected to grow at a below-average rate over the next couple of years.

Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve. The Board will continue to pay close attention to developments in the global economy, trends in household spending, and the outlook for inflation and the labour market. The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.

Source:

Reserve Bank of Australia We are Australia's central bank. We conduct monetary policy, work to maintain a strong financial system and issue the nation's currency.

BUDGET 2023 OVERVIEW:

Social security and families
Increasing income support payments
Proposed effective date: 20 September 2023

The Government will increase working age and student payments by $40 per fortnight.
So, a single person (under age 60) receiving a typical total rate of JSP of $701.90 per fortnight will start to receive approximately $733.10.

Also, JSP recipients aged 55 and over (currently 60 years) who have been on payment for 9 continuous months will receive the higher maximum rate of approximately $785.20. This reflects the increased difficulties that people in this age range have in securing re-employment.
Increasing help for renters
20 September 2023

The maximum rate of Rent Assistance (RA) will increase by 15%. This means a single person with no dependent children currently receiving the maximum RA payment of $157.20 per fortnight will start to receive $180.80, as well as their income support payment.
Expanding access to Parenting Payment (single)
20 September 2023

Eligible single parents will now receive the Parenting Payment (single) until their youngest child turns 14, up from 8 years old.

This is expected to benefit 57,000 single principal carers, including 52,000 women.
It will make these single parents $176.90 per fortnight better off rather than transferring to the JobSeeker Payment.
Reducing energy bills
Starting 2023-24 for two years
Eligible households will receive a rebate of $500 per year and eligible small businesses $650 per year on their power bills.

Reducing health costs
Provided over 5 years from 2022-23

The Government will invest $3.5 billion over five years to triple the bulk billing incentive for GP consultations for children under 16 and Commonwealth concession card holders. This will support 11.6 million eligible Australians to access a doctor with no out-of-pocket costs.

Superannuation
Introducing payday super
1 July 2026

Employers will need to make super contributions on the same day as they pay their employees’ salary and wages. Currently they only need to contribute to super once a quarter.

The Government estimates this would increase the retirement savings of a 25-year-old median wage earner by $6,000.
This will particularly benefit lower paid workers and those in casual and insecure work, many of whom are women.
Increasing tax on earnings on balances over $3 million
1 July 2025

The Government is reducing super tax concessions for people whose total balance exceeds $3 million, bringing the headline tax rate to 30% (up from 15%). The higher tax rate is only payable on earnings corresponding to the proportion of a person’s super that is greater than $3 million.

Aged care
Reforming aged care
2022-23 and over the next 5 years

The Government is providing extra funding to:

increase the pay of many aged care workers by 15%
provide an extra 9,500 Home Care packages
continue COVID-19 measures
strengthen regulation
postpone the new ‘Support at home Program’ and extend grant arrangements for the ‘Commonwealth Home support Programme’ for a further 12 months.
Housing affordability
Expanding the Home Guarantee Scheme
1 July 2023

Siblings, friends and other family members will be able to use the Government’s first home buyer programs together to boost participation. The expanded eligibility will allow any 2 eligible people to be joint applicants for a guarantee.

This includes the First Home Guarantee, the Regional First Home Guarantee and the Family Home Guarantee.
The Home Guarantee Scheme will also be extended to people who have not owned a house in the past 10 years.
Further information on the Home Guarantee Scheme is available from the NHFIC.

Small Business
Increasing the instant asset write-off to $20,000
1 July 2023 to 20 June 2024

The Government will improve cash flow for small businesses by temporarily increasing the instant asset write-off threshold to $20,000 for businesses with an aggregated annual turnover of less than $10 million.

Tax
Increasing Medicare Levy low-income thresholds
1 July 2022

Low-income taxpayers will generally continue to be exempt.

Singles will be increased from $23,365 to $24,276
Families will be increased from $39,402 to $40,939
Single seniors and pensioners will be increased from $36,925 to $38,365, and
Families (seniors and pensioners) will be increased from $51,401 to $53,406.
For each dependent child or student, the family income thresholds increase by a further $3,760.
No changes to incoming tax rates
1 July 2024

Marginal tax rate* (%) remains in place to start in 2025FY

This was introduced by the previous government but supported by Labor at the time. There are constant calls from some for this to be abolished and was flagged as possible before the budget was released. Labor promised to not touch it during the election campaign.

The rate or tax from $45,000 to $200,000 will move to a flat 30% - the 37.5% threshold will disappear.

*Excluding 2 per cent Medicare Levy