Market veteran defends RBA, says Lowe caught in dilemma

Lowe has warned Australians to expect even more interest rate rises. Some commentators say the bank’s aggressive rate rises are increasing the risk of recession.

Financial house Morgan Stanley said the rate rise went against both its, and consensus, expectations. The Reserve Bank was focused on strong public sector wage growth and larger minimum wages increases, as well as services-sector inflation.

“The implicit takeaway from this emphasis on wages, productivity and services inflation is that more labour market weakness is needed – with the RBA clearly not satisfied with the initial softness seen in forward indicators,” Morgan Stanley said.

Millner said there was one upside of the rates increase – it will help savers.

“We’re getting a bit more for our money in the bank. Eighteen months ago, we were virtually getting zero, now you’re getting over 4 per cent for your money. You’re not going to become a millionaire, but you’re not going to lose money.”

If the economic headwinds continue, there may also be some opportunities for investors in the market, but Millner said a decline in initial public offerings for new companies and a number of takeovers that have removed companies from the ASX would limit what’s available for investors.

Loading

“The IPO market particularly has slowed down, so we’re not getting the companies coming on [to the ASX], and in a recent period we’ve had a lot of takeovers … that are limiting the number of companies that are available for people to invest in,” he said.

“If you go back over the last five to seven years [and look at] the number of companies that have left the board, it creates a bit of a hole for people as to where they want to invest and how they want to invest. It limits their scope.”

Millner was recognised on Monday in the King’s Birthday Honours with an Officer of the Order of Australia (AO) for distinguished service to business, rugby union as an administrator, and the community through philanthropy.

The family owns about 9 per cent of Washington H Soul Pattinson, with several members following in Millner snr’s business footsteps. Grandson Tom Millner was chief executive of BKI Investment Company from 2008 to 2016 and is now a director of Contact Asset Management.

“Where I’ve got to today is because of other people. You can’t do a lot of good things on your own without good people. I’ve been married for 48 years and have a great family,” Robert Millner said.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.