Economics

Investor Signposts: Week Beginning 19 April, 2021

Australia: Reserve Bank Board meeting minutes and retail spending data in focus In the coming week, minutes of the last Reserve Bank (RBA) Board meeting are issued. Preliminary retail trade data and purchasing managers’ indexes of services and factory activity dominate the data docket. The week kicks off on Tuesday when ANZ and Roy Morgan…

Investor Signposts: Week Beginning 5 April, 2021

Australia: Reserve Bank dominates calendar In an Easter holiday-shortened week, the Australian economic calendar will be dominated by information on key industry sectors and Reserve Bank events. The week kicks off on Tuesday with the Reserve Bank Board holding its April meeting. No change in policy settings is expected. But as always the commentary from…

Could the vaccine be an economic silver bullet?

Some 12 months after markets sold off in response to what the International Monetary Fund refers to as The Great Lockdown, we find ourselves in a steadily improving environment as populations begin to be vaccinated against the virus, with fiscal and monetary stimulus providing sufficient support. As a result, some of the most dire predictions…

Economic review: A hard bump ahead?

The vast arsenal of fiscal, monetary and legal measures used by Australian governments to offset the COVID-induced economic crisis have worked well. They did not prevent a recession (popularly defined as two quarters of negative GDP growth) but things could have been much worse. What is particularly interesting is that the expected consequences have not…

Why extra super payments will come from you

There’s something odd about those television and internet advertisements telling us we are getting more super. The money seems to come from nowhere. “Pretty soon,” explains the woman getting onto an escalator, “the amount of super paid on top of our wages will go up”. Fair enough, but the increases in compulsory super contributions will…

The reset to lift us out of recession must be bold

Talk about returning the economy to normal after the crisis is misguided. Before the crisis, normal was nowhere near good enough. Australia did indeed manage to go 28 years without a commonly-defined recession. But the expansion had three distinct stages. The first, from the end of the early 1990s recession to the early 2000s, saw…

RBA: No rate hike until unemployment near 4.5%

Reserve Bank governor Philip Lowe’s message to the nation today through the National Press Club is that he means it. He isn’t intending to push up interest rates – he most probably isn’t intending to even think about pushing up interest rates – until 2024, at the earliest. That’s a full three years from now,…

Why the RBA might go negative

Few people expected the Reserve Bank to adjust its cash rate at its first meeting of the year today, and for good reason. It has been saying loudly that it is “not expecting to increase the cash rate for at least three years”. Today it said the commitment extends to 2024. But it isn’t a…

Vital Signs: The importance of the Treasury Secretary

It is widely tipped that US president-elect Joe Biden will nominate Janet Yellen as Treasury Secretary – one of the most important posts in any administration. She will make for a terrific Treasury Secretary, bringing with her a wealth of experience and a lot of IQ points. Her appointment also signals what kind of president…

The budget tax cuts make fiscal sense

This year’s budget is something of a play in two acts. Act one involves large economic stimulus to help plug the hole in output generated by the coronavirus pandemic. Act two tries to set Australia up for a bounce back in economic growth and employment that involves more than just waiting for the pandemic to…