Low confidence — Morgan: Even if the economic statistics continue to offer mixed messages, Australians are clear that things are getting tougher, according to a Roy Morgan poll today. The poll shows a 3 point fall in consumer confidence to the worst level since 1993. More than a quarter of Australians expect to be worse off in the coming year and nearly 40% expect bad economic conditions, with inevitable flow-throughs to major purchasing decisions. This represents a massive turn-around in sentiment even since January this year. However, these sort of numbers are just what Wayne Swan and the RBA will want to see – consumers sufficiently worried about what lies ahead to curb their purchasing and brace themselves financially for further economic difficulties. The Treasurer’s incessant talk of inflation and the RBA’s gruelling interest rates campaign finally seem to be having a significant effect on community sentiment. The constant diet of bad economic news in the press – ignoring the skyrocketing prices mining companies are getting for our resources – has no doubt helped. — Bernard Keane

Everything on the up and up, says RBA: Inflation is not going to ease now until well into 2009 and will run at levels that will trouble the RBA well into 2010, assuming it can engineer a slowing of the domestic economy by cutting demand and boosting unemployment. The bank says it believes prices pressures will start to come off the boil by the end of 2008, as domestic demand slows, capacity pressures ease and borrowing levels fall. That repeats the tone of the commentary in the statement issued Tuesday after the bank board decided to maintain the cash rate at 7.25%. But rates won’t be changing for sometime, perhaps 15 to 18 months, unless the economy weakens quickly. But with the flood of money from the improved coal and iron ore prices, higher oil and gas returns and a prospective boost for rural exports, that weakness will take some time to appear. The RBA now sees an annualised underlying inflation rate of 4.25% by June and 4% by December before the measure falls to between 3.25% and 3.50% in 2009, while the consumer price index (CPI) is expected to reach 4.25% by June and 4.5% by December before declining to 3.25% to 3.5% next year. That’s up from the forecasts in February, but the bank revealed a slightly lower forecast for the end of 2010 of 2.75%, compared to the unchanged forecast for June 2010 of 3%. That’s still closer to the 3% top of the target range of 2-3% that the RBA would be comfortable with. In its second Monetary Policy Statement for the year, released this morning, the bank said: “On this basis, while inflation is likely to remain high in the short term, it is forecast to start to decline towards the end of 2008, reaching a rate of around 2¾ per cent at the end of the forecast period. This assessment would need to be reviewed if the expected moderation in domestic demand does not occur, or if expectations of high ongoing inflation begin to affect wage and price setting.” That compares to this estimate in the first MPS, released in February: “Taking into account these factors, including the Board’s decision to increase the cash rate in February, inflation is forecast to decline gradually from late this year, but would still be around 3 per cent in two years time.” (By the first half of 2010). — Glenn Dyer

Yet another departure from Octaviar (nee MFS) has been announced with chairman, Andrew Peacock, finally resigning after what can be described as a relatively unsuccessful tenure. Peacock will be replaced as Chairman of the company by non-executive director, Paul Manka. Manka is a financial planner from Avenue Capital Management. Manka’s appointment as Chairman is somewhat surprising, given Avenue has been mired in a conflict-of-interest scandal, with its clients being a leading source of funds invested in MFS Premium Income Fund (PIF). At the same time as Avenue was pushing clients into PIF, both Manka, and former MFS director, Michael Hiscock played a large role in both organizations. PIF has since suspended redemptions and payouts to investors. While many companies would have demanded the resignation of a board member who faced such a conflict, Octaviar (which is still suspended from the ASX because its auditor refused to sign-off that they are a going-concern) thought it fitting to appoint Manka as Chairman of the company. — Adam Schwab

News Limited papers reported yesterday that disgraced former MFS CEOs, Michael Christodoulou King and Phil Adams, are being sued by margin lender, Adelaide Bank, for $4 million. The debt relates to a margin loan over MFS shares which now appear to be valueless. Despite refusing to stump up for the money owed to his lender, King is not penniless, still happily saddling up at his $20 million polo facility, Elysian Fields, on the Gold Coast. Amusingly, King claimed that his ownership of the property is actually a good thing, as tournament fees were helping him pay creditors. Once suspects King’s creditors would prefer if he sold the farm and used the proceeds to pay down his personal debts, but that doesn’t appear overly likely. — Adam Schwab

There is nothing that is simple about the Centro group and its struggle for survival. Neither the process nor the outcome of the negotiations that should lead to its banks committing to an extension of its funding until December 15 are as straightforward as it might appear. Commonsense – an agreement to give Centro a decent amount of time to devising a plan to recapitalise and simplify the teetering group rather than put it under and guarantee massive losses for all – almost went out the window when two banks played their own games right up to the final tick of yesterday’s deadline. — Stephen Bartholomeusz, Business Spectator

When you throw rocks for a living, you expect to have some thrown back at you. What’s less common is to have a rock gently returned in thoughtful padding with helpful instructions on how to improve your aim. That is what happened after a column last month when I lobbed a few gibbers at the unhealthy relationship that sometimes exists between real estate valuers and developers — relationships that result in overly generous valuations, relationships that might include the gift of the odd Mercedes to a valuer, relationships that end up costing investors many millions of dollars. — Michael Pascoe, Yahoo!7 Finance

National Australia Bank Ltd., (Australia’s) biggest bank by assets, said first-half profit rose 26 percent as lending and deposits growth offset higher bad debts. Net income increased to A$2.69 billion ($2.54 billion), or A$1.58 a share, in the six months ended March 31, from A$2.14 billion, or A$1.25, a year earlier, the Melbourne-based bank said in a statement today. National Australia’s cash profit of A$2.24 billion, which excludes one-time items, met analysts’ estimates. Lending expanded 15 percent and deposits rose 10 percent and bad debts surged 86 percent to A$726 million from a year earlier. Chief Executive Officer John Stewart forecast loans growth to slow in the second half as economies cool in Australia, New Zealand and the U.K., where the bank gets most of its earnings. — Stuart Kelly, Bloomberg