What do you think the Reserve Bank will do with interest rates in April 2004?

What do you think the Reserve Bank will do with interest rates in April 04?

  • Decrease by more than 0.5%

    Votes: 0 0.0%

  • Decrease by 0.5%

    Votes: 0 0.0%

  • Decrease by up to 0.25%

    Votes: 3 4.5%

  • Remain unchanged

    Votes: 61 91.0%

  • Increase by up to 0.25%

    Votes: 3 4.5%

  • Increase by 0.5%

    Votes: 0 0.0%

  • Increase by more than 0.5%

    Votes: 0 0.0%
  • Total voters
    67
  • Poll closed .
IMO they won't lift before US and Europe start lifting theirs, the gap is quite wide. Moreover, housing lending is in decline. Unemployment stopped plummeting. The AUD is more or less fair valued. No objective reasons to change.

(Disclaimer: In the past I got exactly only 1 of 3 :rolleyes: , and I really wish them to raise, for personal reasons)
 
IMO there is no reason for change. The sound economic outlook, property downturn & the fair value of Aussie dollar are good indicators I feel.

What could happen this month to cause a major change??? ... Taiwan election.... this could lead to significant regional/global instability depending on the outcome. If US/China relations are strained as a result of the election outcome, then Australia either backs the US or risks withdrawal of the ANZUS alliance... either way, the outlook would be gloomy. Let's hope for a peaceful & satisfactory election in Taiwan.


** This is merely my opinion and I do not advocate being an authority on finance or strategic issues**
 
I notice on the tube one outfit , I think it was Morgan Stanley if my memory serves me right ...are now predicting no change in Australian interest rates until 2006.

LL
 
It's been interesting watching the sentiments change over the past six months on rate changes.....initially (on average) people felt there would be stability, then with the first rate rise many people went bearish, which continued up until last month when on average people dropped back to neutral on rates.

This month votes are well down thus far...perhaps the rates issue is becoming boring for people as they realise nothing dramatic is going to happen.

My personal view mirrors Ross's view - however I'm very interested in the psychology of the changing sentiment.

Note that at no point did peoples' sentiments influence what the Reserve Bank did - you cannot predict rates next month or in five years.

What you CAN do is design your portfolio proactively to be resistant to negative trends & flexible to take advantage of opportunities as they arrise. You can also map out the worst case & check your financial resistance to it, making plans of what you will do in this and various other circumstances.

Actually planning for good times is just as important as planning for bad. Many companies are wonderful at contingency planning for bad times but useless at planning what they'll do in a boom.

This will be the last monthly poll I'll be running on interest rate movements - I may run them quarterly if I remember.

Thanks to everyone who voted & commented....I hope you all learnt something - not necessarily about the views of other forumites, but perhaps about the way your own sentiments & views are formed (I certainly have) :)

Here's a summary of the polls. April is in progress & will finalise once closed:

========================================================================
Month....Actual...<-0.50...-0.50...-0.25...0.00...+0.25...+0.50...+>0.50
========================================================================
Aug 03.....0.00...................53.66%..43.90%...........2.44%
Sep 03....+0.25
Oct 03....+0.25
Nov 03....+0.00....................3.45%..51.72%..39.66%...3.45%...1.72%
Dec 03....+0.25....................1.14%..32.95%..60.23%...4.55%...1.14%
Feb 03.....0.00....................2.44%..37.80%..54.88%...3.66%...1.22%
Mar 03.....0.00....................1.96%..62.75%..35.29%
Apr 03.....TBA.....................6.12%..87.76%...6.12%
========================================================================

August 03: http://www.somersoft.com/forums/showthread.php?t=9922&highlight=Reserve+Bank+Interest+Rates

November 03: http://www.somersoft.com/forums/showthread.php?t=12621&highlight=Reserve+Bank+Interest+Rates

December 03: http://www.somersoft.com/forums/showthread.php?t=13096&highlight=Reserve+Bank+Interest+Rates

February 04: http://www.somersoft.com/forums/showthread.php?t=13644&highlight=Reserve+Bank+Interest+Rates

March 04: http://www.somersoft.com/forums/showthread.php?t=14495&highlight=Reserve+Bank+Interest+Rates

Cheers,

Aceyducey
 
Last edited:
There's reasons to move it either way, but I don't thing there are enough reasons either.

If they go up, the market may cool some more, creating oppertunities. If they down down, it saves me some interest. Neither is really going to make a substantial difference at this point. I also don't think a 25 point change either direction will have a huge influence on the market at this point. I wouldn't buy unless I thought it was a good deal in either scenario.
 
BTW - had a discussion with Pitt_St awhile ago about how past personal predictions matched up with what's really happened with interest rates...Below is an extract from what I predicted back in November.

Anyone else what to share what they thought (rightly or wrongly) :)

http://www.somersoft.com/forums/showthread.php?t=12789

Date: 11-11-2003
Aceyducey said:
I expect there will be another rate rise in Nov to reinforce the RB rhetoric & then the RB will leave the situation alone until February or March to guage the effects of its new 'aggressive' stance. Rate rises in Dec/Jan are likely to be less effective anyway as so many people are on holidays that the market isn't likely to respond quite so effectively over the period & suffer a larger correction (fall) in Feb - which the RB doesn't want to happen.

At that stage (Feb or Mar next year), if the RB is satisfied that the market is behaving appropriately it will claim international weakness or satisfaction that the market is responding & will not make any more changes for a few months,with a greater probability of downward movements in rates towards the end of 2004.

Of course, if the market isn't responding by the end of Mar 04 there will be more rate rises - but it is highly unlikely the RB will need to go beyond 6% in prime rates (around 8% on home loans) to make the market behave itself.
Click to expand...
Cheers,

Aceyducey
 
Last edited:
hmm - thought the poll was open for a few days more than this :(

Anyway, latest comments from the reserve bank...the Financial Stability report.

As reported in Property Insider:

The Reserve Bank said there has been “striking growth in both residential property prices and household indebtedness since the mid 1990s”.


“This growth has seen house prices gain an average of 12% per annum compound since the beginning of 1996”, the bank said.

And it seems the Reserve Bank believes the housing market will continue to play a major role in the strength of the economy saying “there are currently few signs that households are having difficulty meeting their financial obligations, with default rates on residential mortgages at very low levels despite the aggregate debt servicing burden standing at a record high”.
“With the heat in the property market and subsequent rise in borrowing it is difficult to envisage a scenario in which developments in the housing market alone could cause major difficulties for the Australian financial system”, the RBA said.
Click to expand...
Reference: http://www.propertyinsider.com.au/echo/external/WebTemplate.cfm?clientid=49&fullstory=1086&periodid=157

Cheers,

Aceyducey
 
Yesterday Citibank had incerased its online savings account rates from 5.25% to 5.40%. Last time they gave % above the cash rate was before the increase from 4.75%. I believe that they have better tools than me to anticipate the market. So I change my bet from "unchanged" to a small increase.
 
spark said:
Yesterday Citibank had incerased its online savings account rates from 5.25% to 5.40%. Last time they gave % above the cash rate was before the increase from 4.75%. I believe that they have better tools than me to anticipate the market. So I change my bet from "unchanged" to a small increase.
Click to expand...
Citibanks analysts dont reflect the majority of the banks economists though...
 
Well most likely they will remain unchanged, however I'm also going for a vote for a small increase.. I'll probably be wrong but its fun being on the other fence.
 
XBenX said:
Citibanks analysts dont reflect the majority of the banks economists though...
Click to expand...
The same majority who predicted an increase in February...
But Citibank also decided to put their money where their mouth is, they pay you the 5.4% today. :) Perosnally I don't know, and I don't care too much (prefer a rise, though), but what I do know is that there are no free meals with banks.
 
spark said:
The same majority who predicted an increase in February...
But Citibank also decided to put their money where their mouth is, they pay you the 5.4% today. :) Perosnally I don't know, and I don't care too much (prefer a rise, though), but what I do know is that there are no free meals with banks.
Click to expand...
Dont look at the surveys, look at what they do w/ their rates as well - this disparity is always quite amusing.
 
For May, I was betting that the rates wouldn't change. But now I think there will be a .5% rise. Main catalyst being lending still increasing, US rates destined to rise any day now and this being the last chance to do anything without affecting the Aussie election outcome.
 
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