ASX poised to edge higher, Wall St advances 27/9/2017

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by Timothy Moore

Local shares are set to open higher, bolstered by modest gains on Wall Street after Federal Reserve chair Janet Yellen made clear the central bank's bias remains tilted toward gradually increasing US interest rates. ASX futures were up 12 points. The Australian dollar retreated below the US79? mark. Iron ore rebounded after falling into a bear market the previous session.

Even though Yellen wasn't expected to say anything new in her speech overnight, she did confirm that at least the current board is holding to its well-telegraphed plan to slowly return rates to more 'normal' levels and her reasoning.

"My colleagues and I currently think that this year's low inflation is probably temporary, so we continue to anticipate that inflation is likely to stabilise around 2 per cent over the next few years. But our understanding of the forces driving inflation is imperfect, and we recognise that something more persistent may be responsible for the current undershooting of our longer-run objective. Accordingly, we will monitor incoming data closely and stand ready to modify our views based on what we learn," Yellen said.

Yellen also flagged the possibility that the Fed's underlying assumptions about the economy, in particular the labour market, could prove wrong.

"Labour market conditions may not be as tight as they appear to be, and thus they may exert less upward pressure on inflation than anticipated. Alternatively, long-run inflation expectations, which have an important influence on actual inflation, may not be consistent with the FOMC's 2 per cent goal. More broadly, the conventional framework for understanding inflation dynamics could be misspecified in some fundamental way."

Yellen said it made sense, given the current "significant uncertainties", to move slowly: "In my view, it strengthens the case for a gradual pace of adjustments. Moving too quickly risks overadjusting policy to head off projected developments that may not come to pass.

"A gradual approach is particularly appropriate in light of subdued inflation and a low neutral real interest rate, which imply that the FOMC will have only limited scope to cut the federal funds rate should the economy be hit with an adverse shock. But we should also be wary of moving too gradually.

"Job gains continue to run well ahead of the longer-run pace we estimate would be sufficient, on average, to provide jobs for new entrants to the labour force. Thus, without further modest increases in the federal funds rate over time, there is a risk that the labour market could eventually become overheated, potentially creating an inflationary problem down the road that might be difficult to overcome without triggering a recession. Persistently easy monetary policy might also eventually lead to increased leverage and other developments, with adverse implications for financial stability. For these reasons, and given that monetary policy affects economic activity and inflation with a substantial lag, it would be imprudent to keep monetary policy on hold until inflation is back to 2 per cent."

Commonwealth Bank, ANZ, NAB and Westpac axe ATM fees for customers of rivals

Greg Hunt and Scott Morrison welcome decision but Bill Shorten says royal commission into banks is still needed

All four of Australia?s biggest banks have decided to stop charging customers of other banks a $2 fee to withdraw cash from their ATMs.

The Commonwealth Bank was the first to announced early on Sunday the abolition of the fee, citing ongoing consumer unhappiness with it.

NAB, ANZ and Westpac followed suit on Sunday afternoon. But the fee will still apply to customers using overseas bank cards.

"We think this change will benefit many Australians and hopefully demonstrate our willingness to listen and act on customer feedback,? the Commonwealth Bank?s group executive of retail banking services, Matt Comyn, said.

NAB?s chief customer officer of consumer banking and wealth, Andrew Hagger, said all Australians, regardless of their bank, could use their ATMs and not be charged a cash withdrawal fee.

The ANZ group executive, Fred Ohlsson, said the fee would be dropped on its more than 2,300 machines from early October.

"While we had been actively working on how we provide fee-free ATMs for our customers, we have decided to remove these fees all together from October,? he said.

The Westpac consumer group executive, George Frazis, said the decision would apply to its Westpac, St George, Bank of Melbourne and BankSA customers and particularly benefit rural and regional consumers.

"We want all Australians, whether they are Westpac Group customers or not, to benefit from one of Australia?s largest ATM networks,? he said. "We understand that the ?foreign ATM? fee has been deeply unpopular with consumers.?

The move led to a rare moment of praise for the banks from Scott Morrison, who claimed the move came after pressure from the government. The treasurer said that pressure would not abate.

"It is important that we continue to take action right across the full suite of issues that are needed to ensure that our banking system is stronger, is fairer, is more accountable, and is more competitive,? he said.

"We are opening our banks up to more competition. We are introducing fairer ways for people to have their claims heard and their issues dealt with by the banks.?

Reserve Bank of Australia data shows Australians made more than 250 million ATM withdrawals from banks other than their own last year, earning the banks millions of dollars.

Comyn said Australians had complained for some time about being charged fees for using another bank?s ATM.

The government minister Greg Hunt said getting rid of the $2 fee was good for consumers.

"I would urge everybody to follow the competitive lead of the Commonwealth Bank,? he told reporters in Melbourne.

The Labor leader, Bill Shorten, who was also speaking after the Commonwealth Bank?s announcement but before the ANZ and Westpac?s, said he expected the other big banks to stop rorting their customers but said it was no reason not to hold a royal commission into banking.

"The Commonwealth Bank has finally realised that the game is up and the rort has got to stop,? he told reporters in Sydney. "Imagine how we could get better banking for all Australians if we had a banking royal commission.?

Some shareholders are proceeding with a class action over the money-laundering allegations.

The no ATM withdrawal fee access applies to the 3,400 CommBank-branded ATMs but excludes Bankwest ATMs and customers using overseas cards.

The consumer group Choice has told News Corp the decision will put pressure on other banks to follow suit and drop the unpopular fees.

With Australian Associated Press