RBA in no rush to raise rates: Midday Roundup

The Reserve Bank is satisfied with the current level of interest rates and is in no rush to raise them, the minutes of its latest board meeting have revealed.

The minutes, released this morning, show the board was largely satisfied with the growth of the economy, saying it had “continued to perform significantly better” than most others in the developed world.

Profits and returns on equity had returned to pre-crisis levels, the RBA said, and bad debts have continued to decline.

“One factor contributing to stronger liquidity positions was the slower rate of credit growth, which, in combination with faster deposit growth, had continued to ease wholesale funding pressures on banks,” it noted.

However, it also noted that the effects of the floods on the economy are becoming evident in data, with coal shipments down. The RBA expects the floods could take about 0.5 of a percentage point off growth in each of the December and March quarters.

The board also noted a deterioration of business conditions, along with relatively disappointing retail sales data despite a small pick-up in early 2011.

“The caution in the household sector was also apparent in the housing market, where nationwide measures of dwelling prices had been broadly stable for some time and auction clearance rates were close to average levels.”

Overall, members said the developments over the past month hadn’t changed their outlook, stating that despite a strong global economy, there are pressures on commodity prices and inflation.

“Members confirmed that the Board’s approach would be to look through temporary effects caused by extreme weather events and to continue to set monetary policy based on the medium-term outlook for growth and inflation.”

“Overall, the economy appeared to be growing at close to its trend rate and the outlook for inflation over the year ahead was consistent with the target.”

Housing finance drops again

The value of housing commitments fell by a seasonally adjusted 4.6% from December to January, according to the latest figures from the Australian Bureau of Statistics.

The figures also show the value of total personal finance commitments fell by 9.5%, while fixed lending commitments also fell by 4.5%.

The total value of commercial finance commitments fell by 5.8%, while leasing financing commitments fell by 1.3%.

Shares open lower after negative leads

The Australian sharemarket has opened lower this morning after world markets dropped overnight due to the effects of the Japanese tsunami disaster.

The benchmark S&P/ASX200 index was down 0.36% or 16 points to 4609.8 at 12.20 AEST, while the Australian dollar opened higher to $US1.01.

AMP shares rose 0.57% to $5.28, while Commonwealth Bank shares rose 0.12% to $50.64. ANZ shares lost 0.87% to $22.76 as NAB shares fell 0.93% to $24.45.

Origen announces capital raising

Origen Energy has announced a $2.3 billion capital raising through an entitlement offer that it will use to pay down debts and strengthen its balance sheet.

“Proceeds from the entitlement offer will be applied to refinance part of the debt used to fund the $3.26 billion acquisition of the Integral Energy and Country Energy retail businesses and the Eraring GenTrader arrangements… and to strengthen Origin’s balance sheet for investment in other growth opportunities,” the company said in a statement.

Managing director Grant King said the raising would solidify the company’s strong financial position.

Wall Street stocks fall over Japan fears

Shares in America fell overnight due to fears over the economic impacts of the Japanese earthquake and tsunami.

The Dow Jones Industrial average fell 51.24 points or 0.43% to 11,993.16.