96% chance that rates will drop by 1% at next RBA meeting

[Nth Brisbanite]

Just noticed that the ASX futures are "punting" that there is a 96% chance that the RBA will drop interest rates by 1% in February. Great news for me as it means that more of my properties will become cash flow positive.

See link below:

http://www.asx.com.au/sfe/targetratetracker.htm

As the economic news gets grimmer every day, I wonder whether the RBA will decrease rates by more than 1% as was the case in UK last year.

 

[kiwigirl]

I So Hope So!!!! Bring On The Interest Rate Reductions!!!

 

[buzzlightyear]

What % chance the banks will bring down rates by the same as the cash rate?

 

[urban cowboy]

Woohoo!! bring it!!

 

[Bradsdad]

No haste to bring 'em down. I still have 1 on a fixed due to expire August

 

[Quasar217]

That's nuts. They can't keep dropping much more - it will be zero! I'm betting on only 0.5%. Things have stablised a bit since late last year. Of course they always cut a bit more because they know the banks won't pass on all of it. The difference between cash rate and bank variable keeps growing.

 

[silversands]

I still reckon there is an outside chance they will drop by 125pts but will be happy with any cut above 50pts. It's all good

 

[Tim]

That's nuts. They can't keep dropping much more - it will be zero! I'm betting on only 0.5%. Things have stablised a bit since late last year. Of course they always cut a bit more because they know the banks won't pass on all of it. The difference between cash rate and bank variable keeps growing.

Quasar217,

what do you mean by things have stabilised since last year? My impression is the downturn is accelerating.

Tim

 

[sparky23]

No haste to bring 'em down. I still have 1 on a fixed due to expire August

Hey speak for yourself! LOL

I reckon we are headed for 2%-3% before much longer!

 

[buzzlightyear]

That's nuts. They can't keep dropping much more - it will be zero! I'm betting on only 0.5%. Things have stablised a bit since late last year. Of course they always cut a bit more because they know the banks won't pass on all of it. The difference between cash rate and bank variable keeps growing.

The prevailing thoughts by the experts are saying a 125-150bps reduction over the next 2 meetings, not taking into account any more 'bad' news (well worse that what we already expect), then there is scope for more cuts.

Don't forget we will have an economy growing at ~ 0% & inflation in a few months at an annual rate of 1.5%. Much more scope for reductions.

Re IR's...........................Excellent.....(with Monty Burns accent!)

 

[craigb]

for sure , they will, the other cash bonanza didnt work very ,well perhaps the interest rate reductions are like the cash bonanza for people who actually know what to do with money

 

[silversands]

c'mon guys, where is the new poll? I was so sure Peter was gonna start one re: whats the next cut likely to be? The last poll on the topic was soooo entertaining, especially those of you who voted after the announcement LOL!

 

[Nth Brisbanite]

That's nuts. They can't keep dropping much more - it will be zero! I'm betting on only 0.5%. Things have stablised a bit since late last year.

They are nearly zero in Japan, USA and UK so that's nothing new. You're going to be throwing your money away if you bet on 0.5%. The RBA has been very aggressive in their last 3 rate cuts, a trend which will continue over the next few months.

To quote Urban Cowboy, " bring it on"!!

 

[sash]

The US, UK, and Japan will be at or near 0% rates next month.

We are currently at 4.25%....my bet is that we can comfortably factor in 2-2.5%. So we will probably see variable rates at 3.5%...I am hopping for 5 year fixed rates with a 4 in front!

Even if rates drop to this level....getting the consumers past the doom and gloom will be difficult without a turnaround in the jobs situation.

 

[crc_error]

why is it our rates are so expensive??

 

[Quasar217]

They are nearly zero in Japan, USA and UK so that's nothing new. You're going to be throwing your money away if you bet on 0.5%. The RBA has been very aggressive in their last 3 rate cuts, a trend which will continue over the next few months.

To quote Urban Cowboy, " bring it on"!!

Well betting was a figure of speech. I'm not actually putting any money on these things as I'm no expert on interest rates.

How much do you think the banks will pass on this time? Last 1% cut we only saw 0.81%.

 

[sash]

Oz and NZ have always has a 2-2.5% premium in terms of rates.

Would be great to get to 1.5% RBA rate....a that rate it would be cheaper to buy than rent. That in turn should stimulate growth because on a 350k borrowing it would cost your about $260 pw.....a lot cheaper than some low end rents.

If you borrowed only 200k it would cost you about $140pw in rental payments. Even if you were unemployed you could pay this!

why is it our rates are so expensive??

 

[Nth Brisbanite]

How much do you think the banks will pass on this time? Last 1% cut we only saw 0.81%.

I think that the banks will pass on the full amount. Their costs of borrowing have decreased since Mr Rudd guaranteed the deposits Australian banks.

 

[Propertunity]

I think that the banks will pass on the full amount.

Someone take his rose-coloured glasses and stomp on 'em for me.

 

[Propertunity]

I'd prefer -ve IR's as happened to Japan 10+ years ago.
http://money.cnn.com/1998/11/06/economy/japan_bank/

I like the idea of getting paid money by the lender to borrow their cash.

Buy if it got to that stage, I'm guessing we'd all be in a lot deeper trouble