Weekly Update: 22.07.22

“The strategic issue here for central banks and governments is how to capitalise on the benefits of the new technologies and new forms of money, while at the same time preserving the stability and other benefits that come from a system underpinned by central banks.”

–    RBA Governor Philip Lowe, “Inflation, Productivity and the Future of Money”, Australian Strategic Business Forum, Melbourne, 20 July 2022

Parliamentary Update:

• The first parliamentary sitting period for the new 47^th Parliament begins next week. Parliamentarians will sit from next Tuesday 26 July through to Thursday 4 August, after which there will be four weeks before the next fortnight of sittings in September.
• Federal Treasurer Jim Chalmers MP has announced the terms of reference for the RBA Review – focusing on inflation targets, mandates, culture, and board make up.
  • Canadian central banker Carolyn Wilkins, ANU economics professor Renee Fry-McKibbin and former senior Treasury official Dr Gordon de Brouwer PSM will jointly conduct the first independent review of the bank since its arrangements were instituted in the early 1990s.
  • The review will exclude RBA’s payments, financial infrastructure, banking, and banknotes functions.

Communications:

• The ABA and participating member banks launched the “Australian Banks: Working to Protect You” PayID campaign.
• The public awareness campaign will run for a month and encourages individual and businesses customers to use PayID when making payments. It includes radio and digital messaging as well as interior and exterior airport signage (including Canberra Airport).

Economic Update:

• Australia’s sale of May 2032 bonds on Wednesday attracted three times as many buyers as the amount offered, near the highest this year for similar-dated debt, according to AOFM data.
• RBA Deputy Governor Michele Bullock addressed the ESA (QLD) on ‘How are Households Placed for interest Rate Increases?’. Whilst some mortgagees are vulnerable, the general outlook is positive:
  • “I would conclude that as a whole households are in a fairly good position. The sector as a whole has large liquidity buffers, most households have substantial equity in their housing assets, and lending standards in recent years have been more prudent and have built in larger buffers for interest rate increases.”
• RBA Governor Philip Lowe addressed the Australian Strategic Business Forum on ‘Inflation, Productivity and the Future of Money’. Lowe on inflation:
  • “We don’t need to return inflation to target immediately”
  • “Looking forward, the path back to 2–3 per cent inflation requires an increase in supply and some moderation of demand.”
  • “The measure of inflation expectations derived from indexed swaps suggests a high degree of confidence in financial markets that the average inflation rate in Australia over the next 10 years will be 2 point something per cent”.

Regulatory Update:

• ACCC Chair Gina Cass-Gottlieb gave the keynote to the LCA’s 2022 Consumer Rights Forum on ‘Making Australia a harder target for scammers’. “We will continue to liaise with the financial sector on these issues and want to see banks and cryptocurrency exchanges placing consumers’ welfare at the forefront of their policies”.
• The ACCC also launched the Consumer Data Right Sandbox, a free tool which will provide CDR participants with a secure testing environment.
• ASIC has released an article on Cybersecurity risk oversight for company directors, after an Australian financial services (AFS) licensee has been found to have breached its licence obligations after failing to adequately manage its cybersecurity risks.
• The RBA released the minutes of its 5 July 2022 monetary policy meeting, where it raised the cash rate target to 1.35%. “Members noted that, while short-term inflation expectations had risen with actual inflation, longer-term measures of inflation expectations were well anchored.”

Selected Infographics:

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