National Australia Bank has warned that rising fuel prices are putting the squeeze on small and medium size businesses, even though so far, the sector remains robust. Lending to SMEs by the country’s largest business lender jumped nearly five per cent over the last half year.

CEO Andrew Irvine said the current economic crisis and stresses aren’t showing up in the numbers, but when he talks to customers, you can hear concern and falling levels of confidence. The NAB boss also said he expects an interest rate rise from the Reserve Bank today.

Australia’s third largest bank yesterday reported a $3.59 billion profit excluding a one-off accounting adjustment, which was a touch below expectations. That, along with Irvine’s less than optimistic view on SMEs, sent the bank’s share price down more than one per cent.

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Greed-o-meter

Australia's inflation rate leads the world

Source:Trading Economics

Fear & Greed Q+A today

On the Reserve Bank's difficult interest rate decision:

"Our house view is that we'll probably see one more interest rate rise and that that's likely to happen tomorrow...

 

"The reason for that is inflation is escalating and is far outside the bands that the Reserve Bank would like to see. I think the challenge for them - and I would tell you, I think they've got a devilishly difficult job ahead of them - is to bring sources of demand down to match sources of supply because we had too much demand, which is what was driving inflation.

 

"But do that at the same time as we're having the full crisis, which in and of itself is also going to be taking demand out of the economy. So this one's tricky. This one's very tricky because you don't want to go too hard that you flip the switch and cause a significant downturn in economic activity."

News in brief

More than $217 billion in shareholder value has been wiped from the S&P/ASX200 in 2026, according to Global X ETFs. Healthcare giants dominated the list of “wealth destroyers”, with CSL leading losses at $23.2 billion, followed by ResMed and Cochlear, each down $10.6 billion.

Federal Treasurer Jim Chalmers has again highlighted intergenerational concerns around access to housing as a key priority of next week’s budget. The budget will begin a year of more ambitious reform, according to the Treasurer.

The corporate regulator is investigating potential insider trading by the chief executive officer of Accent Group, which owns retailers Platypus and Hype DC shoe chains.

A2 Milk has recalled batches of its products sold in the US after detecting a toxin linked to vomiting and nausea.

Retailer GameStop is proposing to buy eBay for about $US56 billion, notwithstanding the online marketplace is about four times the size of the bricks and mortar retailer of video games.

This week, the team from Ausbiz, including Juliette Saly and Nadine Blayney, join us on Fear & Greed. Watch live at ausbiz.com.au and sign up for a daily market wrap at ausbiz.co/newsletter 

Fear-o-meter

Paul Bloxham, Chief Economist, Australia, NZ & Global Commodities, HSBC

Monetary policy is a blunt instrument. Policy rate changes affect the entire economy in broad ways rather than targeting specific challenges with precision. We expect the Reserve Bank to deliver a third consecutive 25 basis point rate hike and for these multiple hikes to deliver an economic downturn with the aim of getting inflation to head back to target.

By contrast, fiscal policy, as delivered in the Federal budget, due on 12 May, could be far more targeted - a 'scalpel', unlike the RBA's 'sledgehammer'. However, in recent years, this is not how fiscal policy has been used. Broad-based and blanket fiscal changes - like the electricity subsidies and the recent cuts to fuel excise - have made fiscal policy much less-targeted than it could be. This time a surgical approach in the budget would be ideal - if not, the risk is that more hammer blows will be needed.

It's a big couple of weeks for Australian policymakers. The RBA is due to announce its next policy decision today, and the Federal Treasurer, Jim Chalmers, is set to deliver this year's Federal budget next week, on 12 May.

Given the many challenges the economy faces at present, it will be tricky to get the policy mix just right - but doing so could be the difference between a recession and avoiding one.

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