Glenn Stevens, the governor of Reserve Bank of Australia (RBA), commented that the economy appears to have been recording reasonable overall growth, low inflation and relatively low unemployment. He further added that as GDP's share, the resource investment boom will take place within coming year or more, speaking in his usual six months appearance before the economic committee of House of Representatives in Canberra on 24 August, 2012.
Inflation rate of Australia has dropped to a thirteen-year low down, freeing the RBA to cut interest rates as well as reducing concerns that the resources success will spark more extensive value rises. Customer prices rose just 1.2 % over a year to June, the lowest yearly increase from 1999. A senior economist at Commonwealth Bank, John Peters said that, wage pressures from the successful resource sector are not flowing into the other economy, who said worries the resource success would fan inflation which had been a concern for the RBA.
Mr. Peters said that, a lack of order for services was "helping place a lid on cost growth other than the mining field", noting the moderately fast rate of growth of supplies and services not influenced by strong Australian dollar had decreased in June quarter.
The NAB raised its loans rate for business lending by 20 basis points recently however the other main lenders are reluctant to unveil whether they’ll also raise loan rates. Increase by NAB in the ''liquidity premium'' for average to large businesses is its second such raise this year. A spokeswoman for National Australia Bank played down the effect of the raise to SmartCompany.
She said that, the liquidity margin is applicable to some market-connected products primarily for average to large-sized businesses which want to access finances for short periods of time. The huge majority of small business users will not be affected as they largely make use of variable rate lending products.
The Commonwealth Bank (CWB) has recorded $1.7 billion revenue for the 3 months to March, though warns the view for the global financial system still remains uncertain. The cash earnings of the company in the quarter were $1.75 billion.
Ian Narev, Chief executive said that funding costs were higher in third quarter, moreover had a negative effect on the net interest margin. The bank said in a statement that, circumstances in the retail banking remained challenging, which is highlighted by high wholesale funding costs, subdued credit demand and competitive deposit pricing.
Big Four banks of Australia face increasing analysis from both the International Monetary Fund as well as ratings firms as financial problems of Europe drive up offshore financial support costs just as domestic development stumbles. IMF executives arrived in Sydney in this week for conferences with the four banks of Australia — National Australia Bank Ltd (NAB), Australia and New Zealand Banking Group Ltd., Westpac Banking Corp. (WBC) and Commonwealth Bank of Australia(CBA). The IMF is analyzing the strength of banks of the Australia as it makes similar assessments in Brazil and Japan.
At Reserve Bank of Australia (RBA) May 1 board conference, the Reserve Bank of Australia cut the official interest rate by 0.5% point to 3.75 %, the major rate cut from February 2009. The summary of conference, released on Tuesday, which is noted while worldwide growth forecasts have been revised up, economic growth forecasts and Australian inflation were revised down.
Michael McCarthy, CMC Markets chief market strategist said that the summary gave no sign as to whether the Reserve Bank of Australia was considering additional rate cuts. He said that, their judgment on this is suspiciously balanced; they’ve given themselves lots of flexibility in terms of financial policy in the upcoming future.