I'm betting the RBA comes back to the pack a bit and goes with .5%.
Is it too early to take bets on the interest rate cut in February?
- Thread starter Perth Investor
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Im going .25% but possibly .50% depending on market conditions at the time.
I have a feeling there is a summer calm happening with some people (in other threads on this forum) thinking interest rates falls are about to stop and even increases for LT rates 
Not comparing US to Australia, but certain analysts/economists (on CNBC and Bloomberg) are predicting US annualised GDP losses for the next quarter of between 5-6% Not 0.5 or 0.6%. I wish I had taken more notice of whom they were so I could have posted a link. Hey they could be wrong, but this is no ordinary US recession.
You only need to look at the astronomical reduction in US auto sales and not only for GM, Ford & Chrysler. There will be other nasties coming to the fore as the US recession takes hold.
Europe will be just a big a basket case, after some of their leaders being quite smug initially about the US's predicament. China we all know, but the news isn't getting better. My god, I have turned into a bear!
There will be flow on effects for Australia. How much I don't know. Then there are the other mitigating forces which have counter-acted central bank rates reductions, keeping mortgage rates higher than they ordinarily might be. 30 year mortgages in the US are only around 5.13% (and only for those with good credit). That's not that much difference to mortgage rates here after the next reduction here in Oz!
After going off on a tangent, I will come back on topic. Given there are 4 weeks to go, much can happen. 50 bps seems the logical choice, but the RBA have chosen to be much more aggressive in light of the economic circumstances that developed last year. My 'gut' feel is more than 50bps, just not sure how much, but for the sake of a number here, I will say 75bps.
Not comparing US to Australia, but certain analysts/economists (on CNBC and Bloomberg) are predicting US annualised GDP losses for the next quarter of between 5-6%
Not 0.5 or 0.6%. I wish I had taken more notice of whom they were so I could have posted a link. Hey they could be wrong, but this is no ordinary US recession. You only need to look at the astronomical reduction in US auto sales and not only for GM, Ford & Chrysler. There will be other nasties coming to the fore as the US recession takes hold.
Europe will be just a big a basket case, after some of their leaders being quite smug initially about the US's predicament. China we all know, but the news isn't getting better. My god, I have turned into a bear!
There will be flow on effects for Australia. How much I don't know. Then there are the other mitigating forces which have counter-acted central bank rates reductions, keeping mortgage rates higher than they ordinarily might be. 30 year mortgages in the US are only around 5.13% (and only for those with good credit). That's not that much difference to mortgage rates here after the next reduction here in Oz!
After going off on a tangent, I will come back on topic.
Given there are 4 weeks to go, much can happen. 50 bps seems the logical choice, but the RBA have chosen to be much more aggressive in light of the economic circumstances that developed last year. My 'gut' feel is more than 50bps, just not sure how much, but for the sake of a number here, I will say 75bps.
I'll stick my neck out and say they'll leave it as it is for a couple of months. The christmas wont give a good indication of what the last 100 point drop achieved (if anything). So lock in zero for me. Maybe April/May till the next move
Very unlikely that it will be no cut. I predict between 50 and 100 points with a leaning towards 75.
How does the RBA measure how much to drop by, anyway??
I mean, arent they supposed to see how the effect of all their other drops have had on the economy first?
I am not complaining, its great to see them drop, but it really seems like a hit and miss approach....
It reminds me of when I do the cooking in the kitchen...."oops, a bit too much salt, oh no! its getting a bit burnt"
I mean, arent they supposed to see how the effect of all their other drops have had on the economy first?
I am not complaining, its great to see them drop, but it really seems like a hit and miss approach....
It reminds me of when I do the cooking in the kitchen...."oops, a bit too much salt, oh no! its getting a bit burnt"
.75 cut in Feb and .25 cut in March
LS
LS
agreed - the bank i'm refinancing away from takes 60 days to pass on a dropped rate, but mere weeks to put them up!
not happy. time to move.
i'm hoping 1% - but realistically i think it will be .25 if anything at all as the christmas "stimulus" will blur any real stats and trends for the period.
Yes its all very annoying isn't it?
The most annoying thing is that the calculations of payments vary so much according to the days in the month, for example the first couple of January payments that have come out from some of my CBA accounts over the last few days are actually a few hundred dollars more than the repayments a month ago which had fallen a few hundred dollars from the previous month - bit hard to get your head around and know what exactly the repayments are each month! I had assumed that this month the last rate cut would have taken a bit more effect and repayments would have dropped some more - not gone up again!
Oh well I suppose it will work itself out in the end!
The most annoying thing is that the calculations of payments vary so much according to the days in the month, for example the first couple of January payments that have come out from some of my CBA accounts over the last few days are actually a few hundred dollars more than the repayments a month ago which had fallen a few hundred dollars from the previous month - bit hard to get your head around and know what exactly the repayments are each month! I had assumed that this month the last rate cut would have taken a bit more effect and repayments would have dropped some more - not gone up again!
Oh well I suppose it will work itself out in the end!
