🦘 Inflation Could Reach RBA’s Target by 2024, Spending Takes A Dip in April, ANZ Under Fire From Regulators

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G’day everyone!

Here’s what we’ve got in store for you today:

• Inflation Could Reach RBA’s Target by 2024

• Spending Takes A Dip in April

• ANZ Under Fire From Regulators

Let’s have a look at the market snapshot before jumping into the news:

Spending Dips as Aussies Brace for Budget Bonanza

Aussie wallets snapped shut this April as families across the nation tightened their belts in anticipation of some much-needed budget relief.

According to the latest dish from the Commonwealth Bank, spending slipped by 1% last month, marking a slowdown to a mere 2.6% growth over the past year.

This comes as no surprise, given the one-two punch of sky-high interest rates and stubborn inflation that's been gnawing at household finances.

With Treasurer Jim Chalmers set to unveil his third federal budget this Tuesday, all eyes are on potential measures to soothe the sting of living costs.

From education fees to utility bills, essential costs have climbed, forcing many to cut back on luxuries. Cafés, bars, and recreation have all taken a hit, with spending in these areas tumbling down by over 3%.

The data, capturing transactions from seven million of the bank’s customers, reflects a cautious consumer climate where even food and beverage expenses dropped by 3.8%.

As the government gears up to possibly continue power bill discounts and boost rental assistance, households are holding their breath for a break.

And with tax cuts on the horizon this July, there’s a glimmer of hope that wallets might just get a little heavier.

Optimistic Treasury Forecasts: Inflation to Hit Target Sooner

The Australian Treasury is offering a glimmer of hope, predicting that inflation will align with the Reserve Bank of Australia's (RBA) target range of 2% to 3% earlier than expected, potentially by the end of 2024.

This optimistic forecast, set to be detailed in the upcoming federal budget, suggests a quicker dip in inflation rates to 3.5% for the financial year ending June 2024, down from a previously anticipated 3.75%.

This adjustment reflects a more positive outlook than the RBA's projections, which don't foresee inflation falling below 3% until late 2025.

Treasurer Jim Chalmers emphasized the budget's role in addressing cost-of-living pressures, hinting at forthcoming measures to ease the financial burden on Australians.

This includes planned tax cuts and significant funding for housing, which are part of the government's strategy to mitigate inflation and support economic growth.

Despite these efforts, the Treasury has also revised down its GDP growth forecasts for the coming years, signaling a cautious approach to the nation's economic recovery post-pandemic.

ANZ Under the Microscope for Bond Sale Shenanigans

ANZ Bank is feeling the heat as the corporate watchdog, ASIC, investigates its handling of a massive $14 billion Australian government bond sale.

While ANZ managed to rake in hefty profits, not everything seems above board, prompting suspicions of potential market manipulation.

This isn't ANZ's first rodeo with regulatory scrutiny; they've previously been slapped for bending the rules around benchmark interest rates.

In 2023, ANZ played a key role in handling the Treasury bonds issued by the Australian Office of Financial Management, responsible for a whopping $78.8 billion in bonds last year.

The investigation focuses on the December 2034 bond, questioning if ANZ may have played its cards a bit too shrewdly.

Despite the drama, the AOFM hasn't lodged a formal complaint, making the situation stickier.

The outcome of this probe could shake up trust in the system, especially with the federal budget around the corner predicting an uptick in government debt issuance.

As financial sectors brace for possible repercussions, ANZ assures cooperation but the ripple effects might just put a dent in their $28.21 share price.

Caps on International Student Numbers: A New Play in the Migration Game

Australia's taking a hard look at its swelling international student numbers, with a new legislative curveball aimed at capping enrolments.

This bold move by Education Minister Jason Clare is part of a broader strategy to deflate pressure on housing and slash migration as election times loom.

The plan gives Clare sweeping powers to set limits, changing the game for the 1,400 educational institutions currently welcoming overseas learners.

As it stands, universities like Melbourne's RMIT and Monash are buzzing hubs for international students, with numbers peaking at over 703,000 as of February 2024.

But the government's not just tightening the reins; they're also clamping down on institutions under scrutiny for flouting rules, demanding a proven track record of quality before letting them enroll international students.

This pivot could reshape the educational landscape, ensuring that only the cream of the crop gets to contribute to Australia's $25.5 billion educational export sector.

As we gear up for Tuesday's budget, eyes are also on proposed hikes in non-refundable student visa fees and a bold plan to erase $3 billion in student debt.

With such seismic shifts, the government's playing a delicate balance, aiming to bolster the economy while keeping its educational doors responsibly open.

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