The CEOs of Australia’s four biggest lenders will this week be grilled by a parliamentary committee for the first time... Just say no: RBA’s Lowe seen averting rate cuts into 2017...
Bank bosses face Australia Parliament grilling on rates, profits
(Bloomberg) -- The chief executive officers of Australia’s four biggest lenders will this week be grilled by a parliamentary committee for the first time amid disquiet over practices such as giving poor financial advice to customers and failing to pass on central bank interest-rate cuts in full.
The bank chiefs -- starting Tuesday with Commonwealth Bank of Australia’s Ian Narev -- are likely to be asked questions about their record profits, executive pay and the fees they charge customers. Australia & New Zealand Banking Group Ltd., National Australia Bank Ltd. and Westpac Banking Corp. are also being sued by the local regulator over alleged manipulation of the nation’s benchmark swap rate.
Prime Minister Malcolm Turnbull, who had his parliamentary majority slashed at elections in July, called for the hearings in an attempt to stave off demands by the main opposition Labor party for a more powerful and wide-ranging independent inquiry, known as a Royal Commission, into the finance industry.
“Australian banks are amongst the most profitable in the world,” said Brian Johnson, a Sydney-based bank analyst at CLSA. “But unusually, because it’s such a self-reinforcing oligopoly, they’ve enjoyed tremendous pricing power in the housing market. So any time anything’s been bad, they’ve simply priced up home loans -- and that necessarily causes some political backlash.”
Just say no: RBA’s Lowe seen averting rate cuts into 2017
(Bloomberg) -- Australia’s new central bank chief Philip Lowe is unlikely to have much to do for the next few months.
Money markets show little probability of a cut in the cash rate from the current 1.5 percent until at least May and a negligible chance at Tuesday’s meeting, Lowe’s first as governor. In an economy spurred by rebounding commodity prices and a diminished drag from falling mining investment, the main challenge is a stubbornly strong currency further curbing inflation.
“The case for no more cuts is strengthening,” said Paul Bloxham, chief economist at HSBC Holdings Plc in Sydney. “The key challenge to this view is that the lift in commodity prices and local growth could present an upside risk to the Australian dollar.”
Lowe has already offered clues to his strategy in the RBA’s renewed agreement with the government, by stressing financial stability concerns as part of monetary policy. The risk of further inflating Sydney house prices -- up 50 percent in the past four years -- is likely to constrain him from further cuts, particularly when growth is strong and employment reasonable amid an increase in the terms of trade, or export prices compared to import prices.
(Bloomberg) -- The chief executive officers of Australia’s four biggest lenders will this week be grilled by a parliamentary committee for the first time amid disquiet over practices such as giving poor financial advice to customers and failing to pass on central bank interest-rate cuts in full.
The bank chiefs -- starting Tuesday with Commonwealth Bank of Australia’s Ian Narev -- are likely to be asked questions about their record profits, executive pay and the fees they charge customers. Australia & New Zealand Banking Group Ltd., National Australia Bank Ltd. and Westpac Banking Corp. are also being sued by the local regulator over alleged manipulation of the nation’s benchmark swap rate.
Prime Minister Malcolm Turnbull, who had his parliamentary majority slashed at elections in July, called for the hearings in an attempt to stave off demands by the main opposition Labor party for a more powerful and wide-ranging independent inquiry, known as a Royal Commission, into the finance industry.
“Australian banks are amongst the most profitable in the world,” said Brian Johnson, a Sydney-based bank analyst at CLSA. “But unusually, because it’s such a self-reinforcing oligopoly, they’ve enjoyed tremendous pricing power in the housing market. So any time anything’s been bad, they’ve simply priced up home loans -- and that necessarily causes some political backlash.”
Just say no: RBA’s Lowe seen averting rate cuts into 2017
(Bloomberg) -- Australia’s new central bank chief Philip Lowe is unlikely to have much to do for the next few months.
Money markets show little probability of a cut in the cash rate from the current 1.5 percent until at least May and a negligible chance at Tuesday’s meeting, Lowe’s first as governor. In an economy spurred by rebounding commodity prices and a diminished drag from falling mining investment, the main challenge is a stubbornly strong currency further curbing inflation.
“The case for no more cuts is strengthening,” said Paul Bloxham, chief economist at HSBC Holdings Plc in Sydney. “The key challenge to this view is that the lift in commodity prices and local growth could present an upside risk to the Australian dollar.”
Lowe has already offered clues to his strategy in the RBA’s renewed agreement with the government, by stressing financial stability concerns as part of monetary policy. The risk of further inflating Sydney house prices -- up 50 percent in the past four years -- is likely to constrain him from further cuts, particularly when growth is strong and employment reasonable amid an increase in the terms of trade, or export prices compared to import prices.
