Get ASX Price
Hot Issues
End of year (EOY) financial strategies
The 2021-22 Australian Budget - Analysis
Videos to help understand financial planning topics.
Investing on behalf of your kids
Super contribution caps are going up from 1 July 2021
Protecting your loved ones
Federal Budget 2021 - Overview
Building a more secure and resilient Australia
Federal Budget 2021 - Health
The return of geopolitical risk? - what to watch over the remainder of 2021
Relationship break-up entitlements when you're in a de facto
What do you need to think about when deciding when to retire?
6 steps to building good financial habits
RBA on hold and likely to remain easy for a long while yet as full employment gets more of a look in
More Aussies look to buy property and refinance
A new crypto world is emerging - the non-fungible token
Saving for your child's future
5 tips for creating your own good fortune this Lunar New Year
A broad range of Calculators.
Shares have had a very strong rebound since March last year so where are we in the investment cycle?
ATO Small Business Newsroom
Many in the dark about retirement
Transfer balance cap set to increase to $1.7 million
How to rebuild your super after a COVID-19 withdrawal
Financial wellness in 2020 - how did yours compare?
The global economy and investment markets this year
ASIC sounds warning around high-yield bond scams
Is $1m enough to retire?
How much super should I have at my age?
Tips for parents who became the bank of mum and dad
How to 2020-proof your finances
Vaccination rates as they happen around the world
2021 - a list of lists regarding the macro investment outlook
2020 - the year that united us
Videos and other resources for our clients
How to review your direct debits and save
Majority of working Aussies to benefit from personal income tax cuts
2020 is coming to an end. Phew!!
Review of 2020, outlook for 2021
The right times for financial advice
Is your home loan still right for you?
3 golden rules that make saving for retirement easier
How to budget for your social life in retirement
Still The Lucky Country
Comprehensive list of COVID-19 initiatives and packages.
Understanding the Age Pension income and assets test
Considerations when downsizing your home
Ways to help reduce your debts before you retire
How to identify (and beat) your spending triggers
Budget 2020 - A very comprehensive break down.
Budget 2020 - At a Glance, Overview, Outlook
Budget 2020 - Fact Sheets
JobKeeper extension – changes implemented
Australia's "eye popping" budget deficit and public debt blow out
The economics of COVID-19 lockdowns
How mindfulness can improve the way we work
Taking control of your personal finances in a COVID-19 world
September update of latest COVID-19 initiatives.
Seven reasons why the trend in shares will likely remain up, albeit with bumps along the way
Market outlook Q&A
Changes to super contribution rules for over 65s
COVID-19: How long may your super savings take to recover?
Boost your super in the lead up to retirement
4 ways to help prepare your finances for a recession
JobKeeper - Latest Update
The fiscal cliff is more likely to be a fiscal slope
Australian economic and fiscal update
Protect yourself from COVID-19 related scams
The economic hangover of COVID-19: how long will it last?
How to rebuild your super after a COVID-19 withdrawal
Market update - July 2020
Investment options and retirement
Extra Tools & Resources for our clients.
The Australian economy and recovery from COVID-19
Digital payments and online banking for older Aussies
The coming surge in Australia's budget deficit and public debt due to coronavirus
10 medium to longer-term implications from the coronavirus shock
Thinking about insurance ahead of retirement
Gifting and financial generosity during coronavirus
Diversification - why it matters now more than ever
The value of financial advice
Our Website, your resources
Light at the end of the coronavirus tunnel
Market update
Changes to pension drawdown and deeming rates
Preserving retirement saving during COVID-19
How investment market volatility could affect your super
COVID-19: Early Childhood Education and Care Relief Package
The coronavirus pandemic and the economy – a Q&A from an investment perspective
Money challenges women face
Data so large it's hard to comprehend.
Is coronavirus driving a recession, depression or an economic hit like no other?
Holding your nerve – why retirees fear a market plunge
Historic $130bn wage subsidy to cover 6 million workers
Stage 2 – Covid-19 stimulus package.
Covid-19 Update - Small Business
PM launches $17.6 billion virus stimulus plan
The plunge in shares – seven things investors need to keep in mind
Three reasons why low inflation is good for shares and property
Can refinancing my home loan save me money?
Expected GDP by country 2010 to 2100
Super investment options – what’s right for you?
Life beyond work
Statistical picture of Australia - Update
A resource hub for our clients.
Market Update
Real Time World Population Growth - Wow!!
Dividends explained
Start 2020 with a best snapshot of Australia.
5 tips for green investing
Make Australians save again
Bushfires and the Australian economy
Grow your super in the new year
Australia by the Numbers
How to create realistic goals…… and stick to them.
5 days to get your finances in order
Our Advent calendar for 2019
5 reasons why I’m not so fussed about the global outlook
Superannuation changes
You'll be the life of the party when armed with this information!
7 tips to improve your financial wellness
Rebooting for retirement
5 reasons why the A$ may be close to the bottom
Resist today, relax tomorrow
Market Update 30 September 2019
How much superannuation is enough?
All Australia's vital statistics - October 2019
6 new financial videos
DGP by country since 1800
Boost savings with compound interest
High times for low interest rates
Market Update - September 2019
Will the world slip up on oil again?
Australia by the numbers - September 2019
Spending money in a cashless world
Dealing with being cash poor and asset rich
Saving for a rainy day
Market update
Access to more resources and tools than most websites.
Nine reasons why recession remains unlikely in Australia
Can I go back to work if I’ve accessed my super?
How's Australia doing statistically?
Protecting your super package.
Making the most of record-low interest rates.
Market Update 2019
How the top 10 global companies have changes since 1998
The longest US economic expansion ever
When can I access my super
Australia by numbers – Update
How to retire early
How to play catch up with your Super
Inflation undershoots in Australia
9 money mistakes to avoid in retirement
What a financial planner does to help.
Australia's vital statistics.
What kind of money parent are you?
How to save money
Federal Budget 2019 - Overview
How the 2019 Federal Budget affects you
New Global growth slowing, plunging bond yields & inverted yield curves
Women and Money
Market Update - March 2019
The problem with getting to 53 years of age.
How to avoid a travel debt hangover
Things to avoid as a newbie investor
Budget Time - How's Australia going?
Most older Aussies prefer home care over a nursing home
Why growth in China is unlikely to slow too far
10 money conversations to have when your relationship heats up
Australia slides into a 'per capita recession'
6 steps to get your money stuff together
All you need to know about how Australia is going.
Australian housing downturn Q&A
6 ways to reduce your credit card debt once and for all
5 life insurance questions you've always wanted to ask
2019 a list of lists - regarding the macro investment outlook
Part 4 - The major benefit of ‘behavioural coaching'
How to adult—a quick guide to personal finances in your 20s
How Australia is performing.
The Australian economy in 2019
Holiday budgeting tips— How to avoid a travel debt hangover
Australia - a comprehensive run-down of our vital statistics.
The Fed and market turmoil - the Fed turns a bit dovish but not enough (yet)
12 ways to avoid waste this Christmas
Rising US interest rates, trade wars, the US midterm election results, etc
Our Advent calendar for 2018
Responsible and ethical investing
What are the 3 biggest living expenses for households?
Your Adviser and Behavioural Coaching
Stop!! Don't do a paper Budget, use our online budgeting tools instead.
Information needed to be the BBQ expert.
Would you like to retire by 40?
The property cycle and the economy
How financial advice helps create wealth.
7 money personalities you may identify with or want to avoid
Are shares expensive?
How's Australia doing statistically?
Super investment options – what’s right for you?
Here's how to lead a happier life
What happened to all the worries about rising inflation and bond yields? Goldilocks, tariffs, Turkey & other things
Is it better to buy an investment property or home first?
Nine keys to successful investing
This information will turn you into a fireside expert.
How Australians will use their tax return
Lessons from the blue zones: secrets of a long life
Trumponomics and investment markets
Tools for budgeting, cash flow, Super and more ….
How tax deductible personal super contributions work
How much super should I have at my age?
The rise of the gig economy and side gigs (thanks to technology)
Statistics for all Australians
Watch out for tax scams
Now’s the time for tax planning
After the Australian household debt and east coast housing booms
Why it pays to contribute to your partner's super
Australia by numbers – Update
How to deal with financial stress – nearly 1 in 3 affected
Federal Budget 2018 – Overview
Your Budget
4 components of our 2018 Federal Budget
US China trade war fears – Q & A
Tools to help you manage your financial position are available on our site.
7 ways to boost your super
Australians reveal their priority goals
Australia by numbers – Update
Your retirement questions answered
How to make money by turning your unwanted goods into cash
Our website is really our digital office.
Bitcoin – is it really for you?
Spread your money, reduce risk
Love and money? It’s not about control
The pullback in shares - seven reasons not to be too concerned
Australia. All you need to know to be the expert.
Australian’s love affair with debt - how big is the risk?
5 ways to keep a cool head in a falling share market
2018 – a list of lists regarding the macro investment outlook
Sports lovers enjoy better financial fitness
Where Australia is at. Our leading indicators.
The year that was and the year ahead
Add some extra cash to your New Year
New year, new financial resolutions
Our Advent calendar for 2017
Where are we in the global investment cycle?
Australia's vital statistics
12 ways to enjoy summer without spending a fortune
One in three Aussies travel without protection
Digital payment options could see you spend more this Christmas
If you’ve always thought property prices only go up…
Will Australian house prices crash?
Where are we in the global investment cycle and what's the risk of a 1987 style crash?
Money steps for women
Resources on our site to help you, your family and your friends.
Australian Dietary Guidelines and healthy eating chart (PDF)
How to retire, your way
Prepare for retirement without missing out today
Be the boss of your cash
The Australian economy bounces back again
Should you lend money to family?
Money mistakes people make in their 50s and 60s
Australian Dietary Guidelines and healthy eating chart (PDF)
Eight steps to improved cashflow... and lifestyle
Powerful Budgeting, cash flow and Super Tools available on our site.
5 ways Australians will use their tax return this year
Australia's leading causes of death - ABS
The threat of war with North Korea
Six traits of Australians living the dream
The break higher in the Australian dollar is likely to be limited
Money can buy you happiness, you’re just spending it wrong
Key Economic Indicators, 2017 – updated
Helping your kids buy a home
From Goldilocks to taper tantrum 2.0
What’s your debt age?
Doing a budget is a good idea but ....
Planning is the key to making it financially
What to do when you come into money
Managing your money when you move in together
Reduce your bills with these household items
It pays to contribute to your partner's super
How to cope with losing independence
Transition to retirement income streams
The Australian economy hits another rough patch
Watch out for tax scams
The three core pillars of this year's budget
Federal Budget - 2017-18 - Overview
Federal Budget - 2017-18 - Budget documents
Make the most of the current super caps
Five, four, three… it’s not too late to get more in super
Super changes are coming
What’s your debt age?
Australian cash rate on hold
Super changes this financial year - Dr Shane Oliver - video
The door is closing on super’s current caps
Is Donald Trump's honeymoon with investors over?
Estate planning and why you need a super plan
What does a comfortable retirement look like?
Give your career a health check
Super changes from July 2017
Changes to the Age Pension assets test
Keep your money safe over the silly season
Looking ahead at 2017
Review of 2016, outlook for 2017 - looking better despite the political noise
Merry Christmas for 2016, a Happy New Year and a prosperous 2017.
54.2 million worries
Five tips for happy healthy ageing
Thinking about managing your own super?
Sending more to the tax office than you should?
Government pulls back on proposed changes to super
Market Update - What to consider when investing in a low return world
Stop!! Don't do a paper Budget, use our online budgeting tools instead.
Oliver's Insight - Megatrends
Value of Advice
A growing family doesn't have to blow the budget
Blinded by optimism
Thinking about managing your own super?
The investment outlook - it's not all that bad!
What’s your biggest obstacle to financial success?
Ageing Parents
Should you own the roof over your head?
Be a senior entrepreneur on your own terms!
Brexit and other key developments
Brexit wins
Commentary on major issues - AMP
Five money habits for a happy financial year
Are grandparents giving too much?
Remember to factor in parental subsidies at tax time
2016-17 Federal Budget - AMP
2016 Budget in detail
How (and why) to talk to your adult children about insurance
Procrastination: Just do it. Eventually.
Why Australian property won't collapse
The Lucky Country holding up pretty well
Have we reached the bottom?
The evolution of the Chinese consumer
Retirement rolls around faster than you think
Pressed for time?
Changes to the Age Pension assets test
Women are building financial intelligence
Heirlooms no more
Initial market falls precede stronger returns - Shane Oliver
What exactly is income protection insurance and do I need it?
A rough start to the year, which could have further to go
Aged Care - Changes to Assessment of Rental Income
A bump in the road, then a new start
New year, new start – are you ready for retirement?
Review of 2015, outlook for 2016 - Dr Shane Oliver
We wish you a Merry Christmas for 2015 and a Happy New Year
Go easy on the plastic over Christmas
Resolutions for a wealthy future
The Australian dollar doing what it normally does - overshoot. Dr Shane Oliver
How to manage volatility in a low return world
The Australian economy - more help will be needed. Dr Shane Oliver
Insurance through my super
Four tactics to build an investment portfolio
The demand for global infrastructure
Help achieve your investment goals with dynamic asset allocation
The Power of Budgeting
Jump retirement hurdles with a coach
Preparing for the time of your life
A Super Loan for all reasons
Making a smooth transition
Australian Government - Budget 2015
Budget 2015 - some professional opinions
Achieving a comfortable retirement
Is off-the-plan on the money?
Should I take my super as a lump sum or not?
Do you have a key person in your business?
Tips for success in a competitive job market
All you need to know about buying at auction
To sell or not to sell?
Saving in a material world
RBA on hold and likely to remain easy for a long while yet as full employment gets more of a look in


Dr Shane Oliver
Head of Investment Strategy and Chief Economist, AMP Capital



Key points

  • The RBA left the cash rate at 0.1% at its April meeting.
  • While the economy is recovering faster than expected the conditions for a rate hike – actual inflation sustainably in the 2-3% target zone and wages growth well above 3% - are unlikely to be met for several years.
  • The RBA will likely start to slow its quantitative easing measures through this year though.


It’s been more than a year since the RBA started using a range of unconventional monetary policies in response to the impact on the economy of the pandemic driven lockdowns and we are now seeing a strong recovery. Normally the RBA might now be starting to contemplate rate hikes for some time in the next year but their operating function is now very different to that seen prior to the pandemic.

RBA on hold again

As was widely expected, the RBA left monetary policy on hold at its April meeting. While again acknowledging that the global and Australian economies are recovering faster than expected the RBA reiterated that:

  • it will not increase the cash rate from 0.1% until actual inflation is sustainably in the 2 to 3 percent target;
  • this will require a much tighter jobs market and much stronger wages growth and these conditions are not expected to be met until 2024 at the earliest; 
  • it’s still committed to the 0.1% 3-year bond yield target; and
  • it noted that it is prepared to undertake further bond purchases beyond current programs if it would help.

Fortunately, the stabilisation in bond markets and some softening in the $A has taken some pressure off the RBA.

Strong recovery

While some sectors of the economy have lagged in the recovery – notably travel related and CBD services businesses reflecting the ongoing impact of the pandemic – spending and activity has diverted to other parts of the economy (eg, from CBD cafes to suburban cafes and from travel to spending on household goods) and the economy overall has seen a faster than expected recovery as evident in a range of indicators:

  • As at December GDP had recovered 85% of its -7.3% slump to be just -1.1% below its pre-pandemic level.
  • Our Australian Economic Activity Tracker of weekly economic data is now running well above year ago levels suggesting that GDP is now above pre-coronavirus levels.

Australia Economic Activity Tracker*

  • Employment has now recovered 99.8% of the jobs lost in the lockdown. While the end of JobKeeper may see a slight rise in unemployment this is likely to be modest given a sharp decline in those working zero or significantly reduced hours and job ads running well above year ago levels.

The rapid recovery reflects a combination of reopening, government support measures and significant pent-up demand.

On top of this annual headline inflation is likely to rise towards 4% this quarter as last June quarter’s price falls drop out of annual calculations, higher oil and commodity prices along with goods supply bottlenecks impact and flood driven rises in fresh fruit and vegetable prices in Australia impact.

So why is the RBA still so cautious and dovish?

There are several reasons why the RBA remains very dovish.

  • First, the recovery remains dependent on getting and keeping coronavirus under control.
  • Second, some parts of the economy are lagging with RBA Governor recently singling out business investment.
  • Finally, and more fundamentally, the economy is still a long way from operating at full capacity.

The last point is key. In the absence of a sharp rise in wages growth locking in higher inflationary expectations the pickup in annual headline inflation this year will likely be temporary as the volatility around childcare and petrol prices drops out, goods supply picks up and consumer demand swings back to services. Assuming productivity growth of around 1% a year, annual wages growth really needs to be 3.5% or more to be consistent with inflation sustainably in the 2 to 3% target range. But while labour underutilisation (ie, unemployment and underemployment) has fallen sharply from last year’s highs to 14.4% its only back to the high end of the range it’s been in since 2014 which saw wages growth stuck around 2% a year and was a key reason behind inflation running below target. To get wages growth above 3.5% year on year from 1.4% currently probably requires labour underutilisation to fall to around 10% or below - which in turn likely requires unemployment to fall below 4% with underemployment running around 6%.

Underemployment and wages growth

Source: ABS, AMP Capital

At present with unemployment at 5.8% and underemployment at 8.5% we still have a long way to go. So, it makes sense for the RBA to remain dovish and cautious. The RBA has now been undershooting its 2-3 percent inflation objective since around 2015, and wages growth has been running below levels necessary to meet the target since 2012. Since mid-last decade the RBA’s inflation forecasts have proved chronically too optimistic (as did most economists’) and so too did its periodic assertions that the next move in rates is likely to be up.

Australia Consumer Price Index

Source: ABS, AMP Capital

The danger for the RBA is that a premature tightening in monetary policy before full employment and 3.5% wages growth are met will keep inflation averaging below the 2-3% target. And the longer this persists the more it will become entrenched and harder it will get to meet the target.

So, having learned its lesson from the post GFC experience the RBA (like the Fed) has changed its approach to focussing on actual inflation being sustained within the target rather than forecast inflation and to a focus on the labour market conditions necessary to achieve this. The shift to focussing on actual as opposed to forecast inflation means that it will necessarily be slower to raise rates which in turn will provide a window for inflation expectations and hence wages growth to move higher to help ensure inflation averages in the target range.

But why not just lower the inflation target?

Put simply, lowering the target would be nuts: if the target is moved whenever it’s breached, it won’t be taken seriously; statistical measures of inflation tend to overstate actual inflation and targeting too low inflation could mean we are knocked into deflation; deflation is not good if it means falling wages, high unemployment, falling asset prices and rising real debt burdens; and, it’s not just about below target inflation but also about achieving full employment and decent wages growth. A failure to achieve this is not socially desirable as its unfair, contributes to a sense of dissatisfaction & can give rise to an economic downturn.

What are the risks with the RBA’s approach?

There are two key risks: financial instability associated with asset price bubbles & excessive debt on the back of a lengthy period of ultra-low interest rates; and a breakout in excessive inflation. Dealing with these in turn:

  • The main concern around financial instability relates to the property market. The experience since 2017 indicates that this can be dealt with partly by tightening lending standards when rates can’t be raised. The RBA and APRA are keeping a close eye on it but don’t seem too worried about lending standards just yet. History tells us though that booming prices like we are now seeing invariably leads to lax lending standards, so it makes sense to start tapping the lending standards brake sooner rather than later.
  • The RBA’s now ultra-aggressive approach to boosting inflation risks higher than desired inflation on a medium-term view say in the next 3-5 years.

What is the outlook for RBA policy?

Given the speed of the recovery we think there is a good chance that the RBA’s objectives for a rate hike will be achieved before the “2024 at the earliest” that it refers to and so are allowing for a first rate hike in late 2023. But that’s still a long way off. Key to watch will be unemployment heading towards 4% and wages growth heading above 3%.

However, if the economy continues to recover as expected (or faster) it will be appropriate to start winding down/ending some of its other monetary policy support measures this year.

  • The provision of cheap funding to banks under the Term Funding Facility is scheduled to end in June and this is appropriate given funding markets are functioning well.
  • It would make sense to leave the 0.1% bond yield target focussed on the April 2024 bond rather than moving out to the November 2024 bond to allow the period of the 0.1% target to “time decay” as the bond matures.
  • Tapering longer dated bond buying (from around $5bn a week now to say $2.5bn a week) from September providing the $A is not too far above that justified by commodity prices and other central banks are also slowing QE is also likely.

Implications for investors?

There are a number of implications for investors from the RBA’s slower reaction function. First, ultra-low interest rates will likely be with us for several more years, keeping bank deposit rates unattractive. Second, the low interest rate environment means the chase for yield is likely to continue to some degree supporting assets offering relatively high sustainable yields. This is likely to include Australian shares where dividends are rapidly recovering and likely to result in a grossed-up dividend yield of 5.2% over the next 12 months

Aust shares offer an attractive yield versus bank deposits

Source: RBA, Bloomberg, AMP Capital

Third, variable rates will remain ultra-low supporting the property market for a long while yet but bear in mind that four year fixed mortgage rates are now edging up with the rise in long term bond yields and this along with continuing low population growth will start to take some of the heat out of the property market through 2021-22.


Important note: While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) make no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided.

Hawthorn Financial Planning Pty Ltd ABN 47 011 910 918
Corporate Authorised Representative
Charter Financial Planning Limited ABN 35 002 976 294
Australian Financial Services Licensee Licence number 234665
Registered address Level 24, 33 Alfred Street Sydney NSW 2000
Legal Disclaimer | Privacy Policy

Hawthorn Financial Planning 67 King William Road UNLEY SA 5061 Ph: (08) 8339 7973