Tag: IMF

Inflation Fears Still Haunt (Especially Australia)…

The Washington-based IMF just published In its biannual world economic outlook, which said that central banks had scored a major achievement to return inflation to the pre-pandemic average without inflicting a global recession.

They go one to say that economic developments over the past four years have had a lot to do with how individual countries have deployed fiscal and monetary policies since the pandemic.

Australia’s choice to hold rates lower, whilst lifting government debt (across states and federally) with most new jobs created in the public sector, thus crimping productivity. This plus high migration has kept inflation well above band, and with little prospect of cuts any time soon, but so far have avoided a technical recession, although many households still are feeling the pinch.

New Zealand lifted rate faster and higher, and hit a recession, but is now cutting, has cut migration, and did not pump-up jobs in the public sector as Australia did. It will be interesting to see which strategy provides the better long-term outcomes.

But for now, the fear of entrenched inflation and higher interest rates for longer suggests that the inflation battle in Australia has yet to be won. And with an election due by May next year, this could well spell trouble for the current Government, though I am not sure the other mob are any better!

http://www.martinnorth.com/

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Digital Finance Analytics (DFA) Blog
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Inflation Fears Still Haunt (Especially Australia)…
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Who’s Telling Porkies Now?

The unelected, neo-liberal biased International Monetary Fund, one among many technocrat groups which try to impose top-down advice based on their underlying philosophy, recently released their latest advice relating to Australia. Their concluding Statement describes the preliminary findings of IMF staff at the end of an official staff visit (or ‘mission’), in most cases to a member country.

This time the IMF gave a mixed assessment of recent government budgets and whether Treasurer Jim Chalmers and his state counterparts were helping the RBA to tame Australia’s worst inflation outbreak in decades, because they warned the federal and state governments that any further unexpected rise in spending will force the Reserve Bank to keep interest rates high, and that future cost-of-living relief needs to be targeted.

We are certainly seeing some evidence of that in our household surveys, the findings of which I will discuss on Tuesday on my live show at 8pm Sydney time. Some are benefiting from the payments, despite having strong cash flow and savings, whereas for those under financial pressure, the rebates are hardly touching the sides, creating a more unequal story financially speaking. Indeed, One in four mortgage holders have had to skip paying for another expense to prioritise keeping a roof over their head, according to Finder.

This is an important point, because its Dr Chalmers and Finance Minister Katy Gallagher have hinted that they plan to announce another round of household subsidies before the next federal election, as Labor tries to placate voter anger over high inflation.

They also called for a complete overhaul of Australia’s tax system and suggested the government phase out $52 billion of superannuation tax concessions and the $19 billion capital gains tax discount to fund a reduction in personal income and company tax rates.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Who’s Telling Porkies Now?
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Who’s Telling Porkies Now?

The unelected, neo-liberal biased International Monetary Fund, one among many technocrat groups which try to impose top-down advice based on their underlying philosophy, recently released their latest advice relating to Australia. Their concluding Statement describes the preliminary findings of IMF staff at the end of an official staff visit (or ‘mission’), in most cases to a member country.

This time the IMF gave a mixed assessment of recent government budgets and whether Treasurer Jim Chalmers and his state counterparts were helping the RBA to tame Australia’s worst inflation outbreak in decades, because they warned the federal and state governments that any further unexpected rise in spending will force the Reserve Bank to keep interest rates high, and that future cost-of-living relief needs to be targeted.

We are certainly seeing some evidence of that in our household surveys, the findings of which I will discuss on Tuesday on my live show at 8pm Sydney time. Some are benefiting from the payments, despite having strong cash flow and savings, whereas for those under financial pressure, the rebates are hardly touching the sides, creating a more unequal story financially speaking. Indeed, One in four mortgage holders have had to skip paying for another expense to prioritise keeping a roof over their head, according to Finder.

This is an important point, because its Dr Chalmers and Finance Minister Katy Gallagher have hinted that they plan to announce another round of household subsidies before the next federal election, as Labor tries to placate voter anger over high inflation.

They also called for a complete overhaul of Australia’s tax system and suggested the government phase out $52 billion of superannuation tax concessions and the $19 billion capital gains tax discount to fund a reduction in personal income and company tax rates.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Corporates Gouge, While IMF Warns The Inflation Squeeze Will Be On For Longer Than Expected!

Households will see Inflation around for much longer than expected and while the pressure on households continue to build, so does distrust across the economy in Australia, according to data from the IMF and a special Roy Morgan End of Financial Year webinar.

Despite the better-than-expected US inflation figures, the International Monetary Fund in its quarterly update of the World Economic Outlook just warned that momentum on global disinflation had slowed, largely due to ongoing elevated rates of services inflation.

For example, the latest data today for the UK showed that The Consumer Prices Index inflation unexpectedly stays at 2% in June, higher than economists predicted and causing a paring of bets on when the Bank of England will cut rates at its next meeting. The news sent the pound above $1.30 for the first time in a year. Services inflation that has been a special focus of the BOE was also unchanged at 5.7%. Economists had expected the headline rate to drop to 1.9%, while the central bank had forecast services at 5.1% by now. Traders pushed back bets on a rate cut next month, pricing in a roughly 30% chance of a move on Aug. 1, down from almost 50% yesterday.

In Australia, the June quarter consumer price index on July 31 will be decisive in determining whether the Reserve Bank of Australia will be forced to deliver a 14th interest rate rise at its August 6 board meeting. With underlying inflation running about 4 per cent, markets are pricing in a 16 per cent chance the RBA will raise the cash rate to 4.6 per cent, from 4.35 per cent, when it next meets. That said, bets on another rate rise from the RBA eased over the past week as bond markets rallied on the back of an outright decline in the US consumer price index, though I think the read across from the US by the markets is over done.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Today’s post is brought to you by Ribbon Property Consultants.

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Corporates Gouge, While IMF Warns The Inflation Squeeze Will Be On For Longer Than Expected!
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Corporates Gouge, While IMF Warns The Inflation Squeeze Will Be On For Longer Than Expected!

Households will see Inflation around for much longer than expected and while the pressure on households continue to build, so does distrust across the economy in Australia, according to data from the IMF and a special Roy Morgan End of Financial Year webinar.

Despite the better-than-expected US inflation figures, the International Monetary Fund in its quarterly update of the World Economic Outlook just warned that momentum on global disinflation had slowed, largely due to ongoing elevated rates of services inflation.

For example, the latest data today for the UK showed that The Consumer Prices Index inflation unexpectedly stays at 2% in June, higher than economists predicted and causing a paring of bets on when the Bank of England will cut rates at its next meeting. The news sent the pound above $1.30 for the first time in a year. Services inflation that has been a special focus of the BOE was also unchanged at 5.7%. Economists had expected the headline rate to drop to 1.9%, while the central bank had forecast services at 5.1% by now. Traders pushed back bets on a rate cut next month, pricing in a roughly 30% chance of a move on Aug. 1, down from almost 50% yesterday.

In Australia, the June quarter consumer price index on July 31 will be decisive in determining whether the Reserve Bank of Australia will be forced to deliver a 14th interest rate rise at its August 6 board meeting. With underlying inflation running about 4 per cent, markets are pricing in a 16 per cent chance the RBA will raise the cash rate to 4.6 per cent, from 4.35 per cent, when it next meets. That said, bets on another rate rise from the RBA eased over the past week as bond markets rallied on the back of an outright decline in the US consumer price index, though I think the read across from the US by the markets is over done.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Today’s post is brought to you by Ribbon Property Consultants.

The Sticky Inflation Problem Will Bite Hard!

US Federal Reserve chairman Jerome Powell has confirmed fears that interest rate cuts in the US would be later rather than sooner as inflation remains stubbornly high. If that price pressure persists, the Fed can keep rates steady for “as long as needed,” Powell said. This came after US retail sales figures for March came in much stronger than expected, stoking speculation rates would stay higher for longer.

This is a theme reinforced by the IMF, who published a report, while data form the UK and New Zealand also reconfirmed the stickier story.

The risks to markets and households are rising.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
The Sticky Inflation Problem Will Bite Hard!
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The Sticky Inflation Problem Will Bite Hard!

US Federal Reserve chairman Jerome Powell has confirmed fears that interest rate cuts in the US would be later rather than sooner as inflation remains stubbornly high. If that price pressure persists, the Fed can keep rates steady for “as long as needed,” Powell said. This came after US retail sales figures for March came in much stronger than expected, stoking speculation rates would stay higher for longer.

This is a theme reinforced by the IMF, who published a report, while data form the UK and New Zealand also reconfirmed the stickier story.

The risks to markets and households are rising.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Put Interest Rates Up, And Reform Taxes Now!

The IMF just dropped a bombshell on Australia, saying that Interest rates should be hiked even higher and the Australian governments should slash spending to avoid stoking inflation. And proper tax reform was essential as an optimal tax package for growth and equity should rely more on the GST, take pressure off personal income tax paid by workers and crack down on capital gains tax breaks.

Now, let me say the IMF has a particular free-market neo-liberal western economic spin, but their comments are pretty damming and need to be taken seriously. Yet of course the Australian polies were quick to claim the IMF somehow endorsed their current policy settings – what – read the report Albo!

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Put Interest Rates Up, And Reform Taxes Now!
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Higher-for-Longer Interest Rate Environment is Squeezing More Borrowers

Elevated inflation means central banks may have to keep policy rates higher in a way that stretches the capacity of borrowers to repay debt said the IMF in its latest Global Financial Stability Report.

And the Bank of England warned in their latest Financial Policy Summary that simply extending the term of mortgage loans is more about protecting banks than borrowers as risks build.

The International Monetary Fund (IMF) has updated its global growth forecasts, with the world expected to grow by 3% this year and 2.9% in 2024.
The IMF tips that Australia’s real GDP growth will slow even faster, from just 1.8% this year to 1.2% in 2024.

Headwinds also confront real estate. Home mortgages, typically the largest category of household borrowing, now carry much higher interest rates than just a year ago, eroding savings and weighing on housing markets. Countries with predominantly floating rate mortgages have generally experienced larger home price declines as higher interest rates translate more quickly into mortgage payment difficulties. Australia is highly exposed as rates have moved more on a weighted basis than many other countries.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Higher-for-Longer Interest Rate Environment is Squeezing More Borrowers
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Higher-for-Longer Interest Rate Environment is Squeezing More Borrowers

Elevated inflation means central banks may have to keep policy rates higher in a way that stretches the capacity of borrowers to repay debt said the IMF in its latest Global Financial Stability Report.

And the Bank of England warned in their latest Financial Policy Summary that simply extending the term of mortgage loans is more about protecting banks than borrowers as risks build.

The International Monetary Fund (IMF) has updated its global growth forecasts, with the world expected to grow by 3% this year and 2.9% in 2024.
The IMF tips that Australia’s real GDP growth will slow even faster, from just 1.8% this year to 1.2% in 2024.

Headwinds also confront real estate. Home mortgages, typically the largest category of household borrowing, now carry much higher interest rates than just a year ago, eroding savings and weighing on housing markets. Countries with predominantly floating rate mortgages have generally experienced larger home price declines as higher interest rates translate more quickly into mortgage payment difficulties. Australia is highly exposed as rates have moved more on a weighted basis than many other countries.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/