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A further problem with rising rates is that banks WILL increase their rate above the RBA cash rate change. I wont go into the technicalities. I used to work in a major bank money market operation. Let me say that a 1% margin at 5% is not as profitable as 1% at 6%...The margin has to increase...

When rates move they will move in one direction and likely progress smoothly. The risk is that the change has a higher upside risk v's downside. While flat seems logical now with dampened growth, poor commodity prices etc the yield curve does suggest if it growth takes off (?) that the RBA wont...

Peter you raise a point the RBA has a HUGE concern about. The RBA already wants to restrict bank lending so that customers aren't in default if they spring back to 8%. If rates fall I would think credit will get harder, not easier. Yet the economy will need some stimulus....Tighter credit could...