CBA's chief executive has defended the lender’s profitability and decision not to pass on official interest-rate cuts... RBA's Lowe shows he’s no ‘inflation nutter’ in debut call
First bank boss to face Australia grilling defends profits
(Bloomberg) -- Commonwealth Bank of Australia Chief Executive Officer Ian Narev defended the lender’s profitability and decision not to pass on official interest-rate cuts in full in an appearance before lawmakers Tuesday.
While he conceded that the bank’s return-on-equity was higher than many peers in other developed markets, Narev also stressed that those economies had seen lenders either fail, nearly fail or at the very least struggle severely.
“You can’t have a prosperous economy unless banks are strong,” Narev told the House of Representatives Standing Committee on Economics in Canberra. “Our profits are at a level that will enable us to keep the confidence of global funders, who play a critical role in our ability to consistently extend credit.”
The CEOs of Australia’s four biggest lenders are this week being grilled by a federal parliamentary committee for the first time, facing questions about giving poor financial advice, executive pay and the fees they charge customers. Profits are also a key focus, along with the interest rates they charge mortgage customers.
RBA's Lowe shows he’s no ‘inflation nutter’ in debut call
(Bloomberg) -- Reserve Bank of Australia Governor Philip Lowe gave his first policy statement Tuesday without deviating from a neutral stance. But his failure to mention inflation data due in a fortnight may signal a scaling back of CPI’s current significance.
Two weeks after taking the reins, Lowe fleshed out a slightly more detailed take on the economy than in last month’s statement: he balanced an apparent slowdown in household consumption and “subdued” full-time employment growth against resurgent commodity prices and renewed strength in some housing markets. The cash rate was left unchanged at 1.5 percent.
“The decision to de-link the next inflation report from next month’s policy decision must be partly influenced by developments in the housing market,” said Bill Evans, chief economist at Westpac Banking Corp. “A very clear neutral bias has been retained.”
The new governor’s focus on the price of assets like housing, along with the flexibility of the inflation target, was set out in the RBA’s renewed accord with the government last month. It stressed financial stability concerns as part of monetary policy and meeting the 2 percent to 3 percent target “over time” from on average over the cycle.
Three months ago, the central bank made clear that the July consumer-price data had the potential to alter the policy stance -- a weak result subsequently prompted a quarter-point rate cut. Lowe told a parliamentary panel last month that RBA officials aren’t “inflation nutters,” suggesting that weak CPI doesn’t immediately imply an easing.
(Bloomberg) -- Commonwealth Bank of Australia Chief Executive Officer Ian Narev defended the lender’s profitability and decision not to pass on official interest-rate cuts in full in an appearance before lawmakers Tuesday.
While he conceded that the bank’s return-on-equity was higher than many peers in other developed markets, Narev also stressed that those economies had seen lenders either fail, nearly fail or at the very least struggle severely.
“You can’t have a prosperous economy unless banks are strong,” Narev told the House of Representatives Standing Committee on Economics in Canberra. “Our profits are at a level that will enable us to keep the confidence of global funders, who play a critical role in our ability to consistently extend credit.”
The CEOs of Australia’s four biggest lenders are this week being grilled by a federal parliamentary committee for the first time, facing questions about giving poor financial advice, executive pay and the fees they charge customers. Profits are also a key focus, along with the interest rates they charge mortgage customers.
RBA's Lowe shows he’s no ‘inflation nutter’ in debut call
(Bloomberg) -- Reserve Bank of Australia Governor Philip Lowe gave his first policy statement Tuesday without deviating from a neutral stance. But his failure to mention inflation data due in a fortnight may signal a scaling back of CPI’s current significance.
Two weeks after taking the reins, Lowe fleshed out a slightly more detailed take on the economy than in last month’s statement: he balanced an apparent slowdown in household consumption and “subdued” full-time employment growth against resurgent commodity prices and renewed strength in some housing markets. The cash rate was left unchanged at 1.5 percent.
“The decision to de-link the next inflation report from next month’s policy decision must be partly influenced by developments in the housing market,” said Bill Evans, chief economist at Westpac Banking Corp. “A very clear neutral bias has been retained.”
The new governor’s focus on the price of assets like housing, along with the flexibility of the inflation target, was set out in the RBA’s renewed accord with the government last month. It stressed financial stability concerns as part of monetary policy and meeting the 2 percent to 3 percent target “over time” from on average over the cycle.
Three months ago, the central bank made clear that the July consumer-price data had the potential to alter the policy stance -- a weak result subsequently prompted a quarter-point rate cut. Lowe told a parliamentary panel last month that RBA officials aren’t “inflation nutters,” suggesting that weak CPI doesn’t immediately imply an easing.
