Bad news for Interest Rate Hawks - RBA Cash rates unchanged
- Thread starter buzzlightyear
- Start date
rates on hold - aug 2
I've called an August or September rate rise. I suspect the recent debt limit arguments in the US (which have as yet not fully been resolved) have led the RBA to hold rates for this month.
I now call a 100% chance of a 0.25% rate rise in September. I also suspect that with higher than expected CPI figures in the Sept quarter, that rates will head up a second time in Dec or Feb.
Inflation is becoming a problem, and the RBA won't hold indefinately. And certainly won't lower interest rates as some on here suggest.
I now call a 100% chance of a 0.25% rate rise in September. I also suspect that with higher than expected CPI figures in the Sept quarter, that rates will head up a second time in Dec or Feb.
Inflation is becoming a problem, and the RBA won't hold indefinately. And certainly won't lower interest rates as some on here suggest.
highly dependant on Q2 GDP numbers in early september. If they are contracting still like last quarter(technical recession), i dont think inflation will be the primary focus of the reserve in the near term. If it was they would have hiked them already. The reserve is concerned about recession and applying the brakes too hard, hence the sit and wait approach.
I for one am happy
I don't know about a rate rise in September ... the word on the street is that even the talk about remote possibility over the last few days has further scared the pants of the consumer and they are scared to spend on anything except essentials.
Unfortunately essentials have gone up in cost but - because they ARE essential one has no choice but to pay. I know my house/contents insurance is around $200 more this year - 25% higher even quoting around - but I have no choice but to pay or go uninsured.
I don't know about a rate rise in September ... the word on the street is that even the talk about remote possibility over the last few days has further scared the pants of the consumer and they are scared to spend on anything except essentials.
Unfortunately essentials have gone up in cost but - because they ARE essential one has no choice but to pay. I know my house/contents insurance is around $200 more this year - 25% higher even quoting around - but I have no choice but to pay or go uninsured.
The scaremongering is working to the detriment of our discretionary retailers who have fixed physical premises.
Some fixed rate products have lowering rates.
I would be keen to hear if we have a scenario of falling rates, in current global uncertainty, will the banks pass on all the cash rate reduction? From what I read and I am no fiscal expert, credit costs may rise due to overseas issue with US and Eurozone.
Will banks pass savings on in full or take some of the spread?
Token.....?
Some fixed rate products have lowering rates.
I would be keen to hear if we have a scenario of falling rates, in current global uncertainty, will the banks pass on all the cash rate reduction? From what I read and I am no fiscal expert, credit costs may rise due to overseas issue with US and Eurozone.
Will banks pass savings on in full or take some of the spread?
Token.....?
Just note these inflation number you see are not the "real inflation" number that the RBA looks at.
The inflation number that we see on our tv screen is the RAW data that the media LOVE to use....but rather the RBA looks at WHY is the inflation so high and what is the real inflation number when certain "barriers" are removed;
The follow have pushed inflation up and are removed by the RBA when looking at the real inflation:
1. banana price influx
2. QLD floods
So really a "media" inflation rate of 3-4% is really 2-3%...As a matter of fact the RBA took the inflation rate of 2.15% in today's decision.
Read the RBA meeting log for more info.
Regards
Michael
The inflation number that we see on our tv screen is the RAW data that the media LOVE to use....but rather the RBA looks at WHY is the inflation so high and what is the real inflation number when certain "barriers" are removed;
The follow have pushed inflation up and are removed by the RBA when looking at the real inflation:
1. banana price influx
2. QLD floods
So really a "media" inflation rate of 3-4% is really 2-3%...As a matter of fact the RBA took the inflation rate of 2.15% in today's decision.
Read the RBA meeting log for more info.
Regards
Michael
Im afraid it will depend on the banks- banks like CBA have invested heavy and used the US financial backing as one of their main source of funds- so if the US economy **** up which looks like it might be....CBA will have to pull back on it's funding source.
Less funding source = less money to give out = no rate cut.
Regards
Michael
Less funding source = less money to give out = no rate cut.
Regards
Michael
The scaremongering is working to the detriment of our discretionary retailers who have fixed physical premises.
Some fixed rate products have lowering rates.
I would be keen to hear if we have a scenario of falling rates, in current global uncertainty, will the banks pass on all the cash rate reduction? From what I read and I am no fiscal expert, credit costs may rise due to overseas issue with US and Eurozone.
Will banks pass savings on in full or take some of the spread?
Token.....?
"BANANA PRICE INDEX" are you serious. If there is such a thing it would have been created by some hack finance journo after Costello used banana prices to tell us we didn't have an inflation problem, not the RBA.
Also if bond yields around the world are either rubbish or just plain risky Australia should be awash with foreign capital. Aussie bond holdings held by foreigners are up 60% this year and the carry trade is very healthy. Add to this a sad domestic and world economy and we should be enjoying cheap money.
Cheers Matt.
Also if bond yields around the world are either rubbish or just plain risky Australia should be awash with foreign capital. Aussie bond holdings held by foreigners are up 60% this year and the carry trade is very healthy. Add to this a sad domestic and world economy and we should be enjoying cheap money.
Cheers Matt.
2.7% core inflation to be exact.....
my suggestion, read the text that accompanies the 'result'. More importantly look at the change in wording.
Its the equivalent of the US 'fed speak'.
Personally i am not drawing any comfort.
Alternatively sit down with a bit of paper and do same game theory with the current environment.
Things crappy: interest rates on hold.
Things get better: time to increase interest rates.
Neither of which is very good for property.
Want a key hint:
look at employment/unemployment.
When unemployment starts to rise significantly, then the RBA will feel alot more comfortable, because labour wont be so tight.
But again when unemployment rises, this wont be good for property at these levels.
Its the equivalent of the US 'fed speak'.
Personally i am not drawing any comfort.
Alternatively sit down with a bit of paper and do same game theory with the current environment.
Things crappy: interest rates on hold.
Things get better: time to increase interest rates.
Neither of which is very good for property.
Want a key hint:
look at employment/unemployment.
When unemployment starts to rise significantly, then the RBA will feel alot more comfortable, because labour wont be so tight.
But again when unemployment rises, this wont be good for property at these levels.
How would they feel comfortable with significantly higher unemployment? That's a prerogative to lower rates, not leave them be
So core inflation is starting to head up to the higher end of the RBA's 2-3% range, and headline inflation is already at 3.6%.
I suspect the the Sept CPI number will show even the core inflation close to 3%.
All things point to a rate rise. I think they will move up 0.25% in September.
The only way the rates will fall is if the world implodes again and we head into GFC2 and we need more emergency rate falls.
And really, I don't think you want to cheer interest rates down from a low 4.75%, as it means that the economy is in trouble, and this time property will be hit hard.
The PIIGS is still to domino more. I've been watching Spain and Italy bonds for 6mths now, and as back in March, I predict that Spain will need a bailout by Dec/Jan. US will likely be downgraded before the year is out.
Italy 10yr Bonds
Spain 10yr Bonds
Other way, whether rates go up or down, I think we are now heading into a 30% property correction (adjusted for inflation) over the next 17mths.
Hi Bluestorm
Is this the same GFC2 you predicted would hit us in May/June 2010?
Is this also the same correction you predicted that would see prices fall
TO 2012?
http://www.somersoft.com/forums/showthread.php?t=61852
Well - that is a debate within itself. There is a large problem of "under" employment in Australia atm, but they are nowadays counted as fully employed (whereas they used to be counted as a percentage employed) and hence skews the employment figures.
Well if you don't think European countries being bailed out one by one, or the US being on the brink of default is not some financial crisis, then I can't help you. Since then the US have had QE2 to keep the economy afloat, and maybe soon QE3.
I have always said 2011 THRU 2012 for property. For the English deprived, that means through to the end of 2012. Check the older posts.
And by the way, property prices ARE falling, so the prediction is correct so far, and will be correct to the end of 2012. The bulls on here were prediction at least single digit rises now.
i would agree with that.
But even with the rate raise it's not gonna make any difference what so ever
1. It's expected ....it's been in the news for the last 4-6 month -so home owners are prepared for it
2. Not a huge increase anyway...unless they increase it 2-3 times in a row - which is possible, given that the next increase will have a very small affect
Regards
Michael
But even with the rate raise it's not gonna make any difference what so ever
1. It's expected ....it's been in the news for the last 4-6 month -so home owners are prepared for it
2. Not a huge increase anyway...unless they increase it 2-3 times in a row - which is possible, given that the next increase will have a very small affect
Regards
Michael
